How Texas Roadhouse’s 2Q16 Results Affected Analysts’ Estimates



Same-store sales growth revisions

The slowing down of Texas Roadhouse’s (TXRH) same-store sales growth trend in June and July, as well as the softening of growth in the restaurant industry, could have prompted analysts to lower their same-store sales growth estimates for the last two quarters of 2016.

Currently, analysts are forecasting Texas Roadhouse to post SSSG of 3.6% and 4.1% in 3Q16 and 4Q16, which is considerably lower than earlier estimated values of 4.2% and 4.7%, respectively.

However, for 1Q17 and 2Q17, there is not much change in their estimates. They are expecting the company to post same-store sales growth of 3.6% and 3.4%, respectively.

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Revised EPS estimates

With a decline in same-store sales growth, it is expected the revenue estimates for 3Q16 and 4Q16 are lowered. However, the analysts have not changed their EPS estimates by much. This could be due to the expectation of higher deflation in commodity prices than earlier expected, which could increase EBIT margins and EPS.

Currently, analysts are expecting Texas Roadhouse to post EPS of $0.37 and $0.38 in 3Q16 and 4Q16, respectively, which could add up to $1.78 for fiscal 2016. This represents a growth of 29.4% from 2015.

In 1Q17 and 2Q17, analysts are expecting Texas Roadhouse to post EPS growth of 15.6% and 18%, respectively.

Peer comparisons

In 2Q16, Texas Roadhouse has posted EPS growth of 56.8%, while its peers Bloomin’ Brands (BLMN) and Buffalo Wild Wings (BWLD) have posted EPS growth of -39.1% and 18.8%, respectively. During the same period, Brinker International (EAT) is expected to post EPS growth of 28%.

Next, we’ll look at the PE multiple for Texas Roadhouse.


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