Texas Roadhouse Inc.
) posted first quarter 2012 adjusted earnings of 31 cents per
share, which missed the Zacks Consensus Estimate by a penny, but
grew 15.3% year over year. Including a charge of 4 cents related to
a legal settlement, the company reported earnings of 27 cents per
share. The lower-than-expected results were attributable to charge
for a legal settlement.
Total revenue climbed 14.0% from the prior-year quarter to
$324.9 million. The upside was attributable to higher comparable
sales growth. Company-owned restaurant sales increased 14.5% to
$322.0 million, whereas franchise royalties and fees upped 15.9% to
$2.9 million. Comparable restaurant sales grew 6.0% at
company-owned restaurants and 6.9% at franchised restaurants.
During the quarter, restaurant operating margin slid 13 basis
points (bps) to 19.1% on an 80-bp rise in cost of sales, partially
offset by a decrease of 42-bp in labor cost, 19 bps in other
operating costs and 7 bps in rent.
During the quarter, Texas Roadhouse opened 8 company-owned
restaurants but did not open any franchise restaurant. The company
did not close any unit. It remains on track to ramp up its
development pipeline in 2012 and 2013.
Management's 2012 goal includes 25 unit openings, reflecting a
25% growth from the unit base in 2011. The company is also aiming
to open at least 25 new units in 2013 as well. At the end of the
quarter, Texas Roadhouse operated 302 company-owned and 72
Texas Roadhouse ended the quarter with cash and cash equivalents
of $77.3 million and total long-term debt of $51.5 million.
Including legal settlement charges of 4 cents, the company
expects fiscal 2012 earnings in the range of 91 cents to 93 cents.
The company expects food cost inflation in between 7.0% and 7.5% in
fiscal 2012, slightly below the previous estimate of 8%.
Texas Roadhouse maintained its comparable-store sales growth
outlook of 4-5%. Capital expenditure is also expected to be in the
range $80-$85 million for fiscal 2012.
Texas Roadhouse's top-line momentum is in place, as is evident
from the continuous rise in comparable sales. Comparable restaurant
sales for the first four weeks of the second quarter of 2012
already increased about 4.8% compared with the prior-year period.
This optimistic trend is encouraging for the upcoming quarter.
Financially, the company is in a good position and continues to
enhance shareholder value with share buyback and dividend. The
company, which offers specially seasoned steaks, also continues to
focus on unit growth and international expansion. In 2012, the
company plans to open a few restaurants in the Middle East and is
also eyeing expansion in both Canada and Mexico.
However, we remain cautious on the stock based on rising input
cost pressure, lower consumer spending and intense competition
among restaurant companies with respect to price, service, location
and concept in order to drive traffic.
Texas Roadhouse, which competes with
BJ's Restaurants Inc.
), currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We are also maintaining our long-term
Neutral recommendation on the stock.
BJ'S RESTAURANT (BJRI): Free Stock Analysis
TEXAS ROADHOUSE (TXRH): Free Stock Analysis
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