Wedbush analysts said Texas Roadhouse is the “primary transaction share gainer” in casual dining right now and raised its price target on shares. The news Wedbush increased estimates for the company’s first and second quarter same-store sales growth, citing a boost in dining out thanks to better weather. A more seasoned staff and faster turnarounds for tables are other factors improving Texas Roadhouse’s operations, analysts said, and also raised their full-year projections. On the flip side of this, Wedbush stayed a bit conservative on 2025 margin estimates. Though Wedbush says they aren’t seeing much risk to 3-4% commodity inflation and 4-5% labor inflation guidance, they factored in commodity inflation above the midpoint of guidance. Wedbush analysts anticipate additional potential share buybacks from Texas Roadhouse management following a $500 million authorization late February. The company has a historical track record of aggressively buying back the stock when share prices are down, analysts said. The firm raised the restaurant’s target price ten bucks to $210 from $200, and maintained its outperform rating. Big picture Wedbush’s read on Texas Roadhouse parallels the positive outlook that Darden Restaurants shared for the casual dining industry in a post-earnings call last week. As with Texas Roadhouse, Darden executives attributed top of year weakness within its chains to poor weather, but said spring would be the start of a comeback season for the industry. Texas Roadhouse has not yet released any data on its progress in March. But analysts see positive signs for a chain that carries a reputation of providing quality food at a good value to consumers, a winning formula in uncertain times. Analysts at Bank of America met with Texas Roadhouse executive management earlier this month, and they reiterated “weather-driven changes in consumer behavior” but said “there are no signs of worsening sentiment.” The company is prioritizing the maintenance of excellent restaurant operations and maximizing profits, Bank of America analysts noted. Bottom Line The Investing Club is aligned with Wedbush’s note as we agree that inclement weather played a significant role in the softness in January and February. Although consumers don’t enjoy dining out in bad weather, the underlying health of the company was strong as demonstrated in their fourth-quarter earnings, said Jeff Marks, director of portfolio analysis for the Club. Jim Cramer is bullish on Texas Roadhouse, saying that the news from Wedbush was terrific for the company during Friday’s morning meeting. Initially, Jim was concerned that Texas Roadhouse’s same store sales would remain subdued following a difficult start this year but said it turns out that he was wrong. The stock is trading down 4% year to date, less hard hit than many of its industry peers, said Jeff Marks, director of portfolio analysis for the Club. We last purchased additional shares of Texas Roadhouse twice earlier in March at $176 and $178. We would absolutely buy more shares of the stock if it dips below $170. TXRH 1Y mountain Texas Roadhouse 1 year (Jim Cramer’s Charitable Trust is long TXRH. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Traders work on the floor at the New York Stock Exchange in New York City, U.S., March 27, 2025.
Brendan McDermid | Reuters
Wedbush analysts said Texas Roadhouse is the “primary transaction share gainer” in casual dining right now and raised its price target on shares.
