Company Overview
Texas Roadhouse, Inc. operates as a casual dining restaurant chain with a significant presence in the United States and international markets, serving seasoned and aged steaks, ribs, seafood, chicken, pork chops, and other menu items through its Texas Roadhouse, Bubba's 33, and Others segments. The company functions within the Consumer Cyclical sector and the Restaurants industry, positioning it as a business whose performance is closely tied to discretionary consumer spending and economic cycles. This entity employs approximately 101,000 people and holds a total market capitalization of $10.60B, while reporting trailing twelve-month revenue of $5.88B. These financial metrics indicate that Texas Roadhouse, Inc. is a substantial enterprise within the foodservice landscape, possessing the scale to negotiate supply chain efficiencies and maintain broad market penetration across its diverse geographic footprint.
Financial Health
The company reported trailing twelve-month revenue of $5.88B, generating net income of $405.55M and EBITDA of $681.73M, which highlights a significant gap between total revenue and final profit attributable to shareholders. This disparity reveals a substantial cost structure comprising cost of goods sold, operating expenses, and taxes that reduces the bottom line by approximately 31.4% of total revenue. Free cash flow stands at $189.81M, providing the organization with financial flexibility to service debt obligations, fund capital expenditures for new locations, or return capital to shareholders through dividends and buybacks. Gross margin is reported at 16.5%, operating margin at 6.5%, and profit margin at 6.9%, indicating that the company retains a modest portion of sales after covering direct food costs and overhead before arriving at net income. On the balance sheet, the company holds $134.71M in cash against total debt of $976.76M, resulting in a debt-to-equity ratio of 65.92, which suggests a leveraged financial structure reliant on external financing. The current ratio is 0.50, indicating that the company possesses less than half of its current liabilities in liquid assets, which points to a tight short-term liquidity position that may require careful management of working capital. Return on Equity is 29.0% and Return on Assets is 8.8%, metrics that demonstrate management is highly effective at generating profits from shareholder equity and utilizing its asset base to produce earnings.
Valuation Assessment
The trailing twelve-month P/E ratio is 26.26, while the forward P/E is 20.95, suggesting that the market expects earnings to recover and grow in future periods to justify the lower multiple. The price-to-book ratio stands at 7.23, indicating that the market values the company at a significant premium over its net tangible asset book value, reflecting intangible assets like brand strength and customer loyalty. Alternative valuation metrics such as the price-to-sales ratio of 1.80 and an EV/EBITDA of 16.76 provide context on how revenue and cash generation are priced relative to peers. The stock has traded between a 52-week high of $199.99 and a 52-week low of $148.73, meaning current trading levels fluctuate within a range of approximately 51.26% of the annual high volatility. With a beta of 0.87, the stock exhibits lower volatility relative to the broader market, implying that price movements are generally less sensitive than the overall market index.
Growth & Income
Revenue growth year-over-year is 3.1%, whereas earnings growth year-over-year is -25.9%, indicating that earnings are currently declining faster than revenue, which implies margin compression or one-time charges impacting profitability. As a dividend payer, the company offers a dividend yield of 1.9% with a payout ratio of 44.6%, suggesting that the dividend is paid from a portion of earnings and may be sustainable if profitability stabilizes in the near term. The divergence between positive revenue growth and negative earnings growth highlights the challenge the company faces in maintaining profitability amidst fixed cost pressures. Overall, the growth and income profile presents a scenario of stable top-line expansion that has not yet been matched by bottom-line improvements, while providing a modest income stream to shareholders.