Texas Roadhouse Inc.
) recently posted third quarter 2012 earnings of 25 cents per
share, which beat the Zacks Consensus Estimate of 23 cents and
prior-year earnings of 22 cents.
Total revenue climbed 15.0% from the prior-year quarter to $308.7
million, benefiting from comparable sales growth. Reported
revenue was almost in-line with the Zacks Consensus Estimate of
$309.0 million. Company-owned restaurant sales increased 15.0% to
$306.1 million, whereas franchise royalties and fees jumped 11.0%
to $2.6 million. Comparable restaurant sales grew 3.6% at
company-owned restaurants and 4.9% at franchised restaurants.
During the quarter, restaurant operating margin slipped 8 basis
points (bps) to 17.9% on a 31-bps rise in cost of sales and
33-bps hike in labor cost, partially offset by a cut of 51 bps in
other operating costs and 5 bps in rent.
During the quarter, Texas Roadhouse opened 3 company-owned
restaurants but did not open any franchise restaurant. The
company did not close any unit. As of September 25, 2012, the
company operated 384 restaurants, of which 312 are company-owned
and 72 are franchised.
It remains on track to ramp up its development pipeline in 2012
and 2013. Management is still focused to achieve its 2012 goal of
opening 25 new units, reflecting a 25% growth from the unit base
in 2011. In 2013, the company aims to unveil 28 new units.
Texas Roadhouse ended the quarter with cash and cash equivalents
of $84.3 million and long-term debt of $51.4 million.
Including legal settlement charges of 4 cents, the company
expects 2012 earnings towards the higher end of its previous
guided range of 94 cents to 96 cents. The company expects food
cost inflation in between 6.5% and 7.0% in fiscal 2012 versus the
previous estimate of 7%.
Texas Roadhouse maintained its comparable-store sales growth
outlook of 4.0-4.5%. Capital expenditure is expected to be $90
million for 2012.
For 2013, the company anticipates positive comparable sales
growth and food cost inflation in the range of 5.0% to 8.0%.
Despite tough consumer environment, Texas Roadhouse continues to
witness growth in comparable sales. Comparable restaurant sales,
for the first four weeks of fourth quarter 2012, have
already increased about 3.0% compared with the prior-year period.
Thus, comp sales growth trend remains encouraging. The casual
dining chain also remains focused on enhancing shareholders'
value and expansion through unit growth.
However, food cost pressure, wary consumer spending and intense
competition among restaurant companies with respect to price,
service; location and concept in order to drive traffic remain
Texas Roadhouse, which competes with
Domino's Pizza, 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.
DOMINOS PIZZA (DPZ): Free Stock Analysis
TEXAS ROADHOUSE (TXRH): Free Stock Analysis
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