Texas Roadhouse Inc.
) fourth-quarter 2012 earnings of 19 cents per share surpassed
the Zacks Consensus Estimate as well as prior-year earnings by
11.76%. Increased revenues along with efficient cost containment
resulted in the increase in earnings.
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Total revenues climbed 12.0% from the prior-year quarter to
$309.5 million, benefiting from comparable sales growth. Reported
revenues inched past the Zacks Consensus Estimate of $309.0
million. Comparable restaurant sales grew 4.4% at company-owned
restaurants and 4.5% at franchised restaurants.
During the quarter, restaurant operating margin expanded 74 basis
points (bps) to 17.6% attributable to lower labor cost and other
operating costs. Food cost inflation came in at 6% for the
quarter mainly driven by higher beef costs.
In 2012, adjusted earnings per share were $1.00, up 13% year over
year. Earnings growth was facilitated by 14% increase in total
revenues to $1.26 billion in 2012. A 4.7% increase in
company-owned comps and 5.3% expansion at franchised comps drove
the yearly revenues.
During the quarter, Texas Roadhouse opened 7 company-owned and 2
franchised restaurants. The company also closed one company-owned
Aspen Creek unit. At the end of 2012, the company operated 392
restaurants, of which 318 were company-owned and 72 were
In Dec 2012, Texas Roadhouse acquired two Illinois-based
franchise restaurants for $4.3 million. Although the acquisition
did not have any accretive impact in 2012 as it occurred on the
last day of the company's 2012 fiscal year, the impact should be
reflected in 2013.
Texas Roadhouse remains on track to ramp up its development
pipeline in 2013. In 2013, the company aims to unveil 28 new
units. The development schedule is expected to be backend loaded
with two-third of openings taking place in the second half of the
For 2013, the company anticipates positive comparable sales
growth and food cost inflation in the range of 6.0% to 7.0%,
higher than the previous expectation of 5%-8%. Comparable
restaurant sales, for the first 55 days of first quarter 2013,
have already increased about 2.2% compared with the prior-year
Despite tough consumer environment, Texas Roadhouse' ability to
continuously register solid comparable sales is commendable.
Comparable restaurant sales for the first 55 days of
first-quarter 2013 indicate another quarter of encouraging comps
The casual dining chain also implemented a menu price increase of
approximately 2.0% across its restaurants in Dec 2012, which
should augur well in the ensuing quarters. Also, when the
majority of the industry-players are shifting focus towards
franchised-based operation, the latest franchisee acquisition
speaks of Texas Roadhouse's confidence in its own operation.
However, food cost pressure, wary consumer spending and intense
competition among restaurant companies remain headwinds. Like
2012, beef costs, to which the company is most exposed to, is
expected to remain high in 2013.
Texas Roadhouse currently retains a Zacks Rank #3 (Hold). Others
players in the same industry, which look attractive at current
Red Robin Gourmet Burgers Inc.
) carrying a Zacks Rank #1 (Strong Buy) and
AFC Enterprises Inc.
Burger King Worldwide Inc.
) carrying a Zacks Rank #2 (Buy).