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Texas Roadhouse rises as 4Q profit tops Street

NEW YORK (AP) -- Shares of Texas Roadhouse rose more than 4 percent in morning trading Wednesday as the restaurant chain's fourth-quarter earnings beat Wall Street's expectations.

THE SPARK: Texas Roadhouse Inc. reported Tuesday that its fourth-quarter net income climbed 13 percent to $13.9 million, or 19 cents per share, from $12.3 million, or 17 cents per share, a year earlier. Revenue increased 12 percent to $309.5 million from $276.6 million.

Analysts surveyed by FactSet expected earnings of 18 cents per share on revenue of $359.4 million.

The company also raised its quarterly dividend by 33 percent to 12 cents per share from 9 cents per share. The dividend will be paid on March 29 to shareholders of record on March 13.

THE ANALYSIS: Jefferies' Andy Barish said in a client note that Texas Roadhouse's better-than-expected food costs helped expand margins. The analyst said that the company faces difficult comparisons in the first quarter and its traffic is down 1 percent for the year to date. With limited visibility on earnings per share, Barish reaffirmed a "Hold" rating.

Christopher O'Cull of KeyBanc Capital Markets said the quarterly performance was buoyed by a 4.4 percent increase in revenue at restaurants open at least a year. This figure is a key gauge of a restaurant operator's performance because it excludes results from locations recently opened or closed.

O'Cull maintained a "Buy" rating and $24 price target.

SHARE ACTION: Texas Roadhouse's stock gained 75 cents, or 4.3 percent, to $18.25 in morning trading. Over the past year, the shares have traded between $15.72 and $19.35. The stock is up 6 percent over the last three months.