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Texas Roadhouse, Inc. (NASDAQ:TXRH) just released its quarterly report and things are looking bullish. The company beat expectations with revenues of US$899m arriving 3.4% ahead of forecasts. Statutory earnings per share (EPS) were US$1.08, 4.6% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Texas Roadhouse after the latest results.
Taking into account the latest results, the consensus forecast from Texas Roadhouse's 19 analysts is for revenues of US$3.47b in 2021, which would reflect a decent 17% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 37% to US$3.70. In the lead-up to this report, the analysts had been modelling revenues of US$3.31b and earnings per share (EPS) of US$3.43 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Despite these upgrades,the analysts have not made any major changes to their price target of US$109, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Texas Roadhouse, with the most bullish analyst valuing it at US$127 and the most bearish at US$96.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Texas Roadhouse is an easy business to forecast or the the analysts are all using similar assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Texas Roadhouse's past performance and to peers in the same industry. The analysts are definitely expecting Texas Roadhouse's growth to accelerate, with the forecast 37% annualised growth to the end of 2021 ranking favourably alongside historical growth of 6.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Texas Roadhouse to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Texas Roadhouse following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Texas Roadhouse. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Texas Roadhouse going out to 2023, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 2 warning signs for Texas Roadhouse that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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