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Texas Roadhouse Stock Slid 12% on Slowing Same-Store Sales Growth

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2Q16 performance

Texas Roadhouse (TXRH) is a Louisville, Kentucky–based restaurant chain that specializes in steak dishes. The company reported its 2Q16 results on August 1, 2016, after the Market closed.

The company posted revenue of $508.8 million and adjusted EPS (earnings per share) of $0.47. Compared to 2Q15, its revenue increased by 11.9%, while its EPS grew by 56.8%.
Texas Roadhouse Stock Slid 12% on Slowing Restaurant Sales

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Market’s response

Texas Roadhouse’s EPS beat analysts’ estimates of $0.45. However, revenue was lower than analysts’ estimates of $509.30. Although its 2Q16 EPS were higher than expected, the trend of slowing same-store sale growth, rise in labor wages, and softening of growth in the restaurant industry could have made investors skeptical about the company’s future earnings, leading to a decline in its share price.

Texas Roadhouse closed August 2, 2016 at a share price of $41.80, a fall of 12.4% from its previous day’s closing price.

Year-to-date stock performance

Despite a sharp fall in its share price after the announcement of its 2Q16 results, Texas Roadhouse has returned 16.9% year-to-date. During the same period, its peers Brinker International (EAT), Bloomin’ Brands (BLMN), and Buffalo Wild Wings (BWLD) have returned -6.1%, 6.6%, and 5%, respectively.

Series overview

In this series, we’ll discuss the 2Q16 earnings call and notes along with Texas Roadhouse’s performance on key metrics during the quarter. We’ll also cover management’s guidance and analysts’ estimates for the rest of 2016 and beyond.

Let’s start by discussing Texas Roadhouse’s 2Q16 revenue growth.

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