Texas Roadhouse Makes Diners, Investors Happy


Texas Roadhouse ( TXRH ) serves up big portions of food in a fun and friendly atmosphere for diners. For investors, the company delivers growth and rising dividends.

Last week, the restaurant operator posted a fourth-quarter profit of 24 cents a share, up 26% vs. the year-ago period. That marked an improvement from flat earnings in Q2 and a small decline in the third quarter. Revenue in the latest quarter jumped 21% to $376 million -- the biggest gain in years.

An extra week in the final quarter of 2013 helped lift Texas Roadhouse's top-line and bottom-line growth. During the fourth quarter, Texas Roadhouse opened 12 new company-owned restaurants and one franchised store. It expects to open another 25 to 30 company locations in 2014.

For all of 2013, Texas Roadhouse's earnings grew 9% to $1.13 a share from $1.04 a share in 2012. The 2012 figure excluded a one-time charge. Sales rose 13% to $1.42 billion, marking a third straight year of double-digit growth.

Analysts polled by Thomson Reuters see profit rising 13% this year to $1.28 a share. Texas Roadhouse has a three-year Earnings Stability Factor of 2, indicating a steady stream of profits.

The company started paying shareholders dividends in 2011 and has raised its payout each year since. It recently boosted its dividend by 25% to 15 cents a share. The dividend will be paid April 4 to shareholders of record March 19. It offers a yield of about 2.3% at current prices. Texas Roadhouse is only one of two stocks in the Retail-Restaurant group with an IBD Composite Rating of 80 or better and producing a yield of 2% or more.

After sliding 21% from its October peak, the stock has been bouncing back in recent weeks. Volume has been heavy in the comeback, a sign of professional buying. The stock is forming a potential base, which would be a first-stage structure. Texas Roadhouse reset its base count about a month ago.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: TXRH

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