Texas Roadhouse Gives Investors Growth & Income
Restaurant chainTexas Roadhouse ( TXRH ) serves up big portions at reasonable prices for diners. For investors, the company offers a mix of growth and income.
Since 2000, the Louisville, Ky.-based firm has delivered earnings growth of double digits or better in all but one year. Even though many companies saw earnings and sales plunge in 2008, Texas Roadhouse's profit and revenue grew 2% and 20%, respectively.
In late February, the company beat expectations with fourth-quarter profit and sales that rose 12%. Modestly lower food costs and a small uptick in traffic boosted results.
For all of 2012, profit grew 18% to $1.04 a share. Earnings per share have nearly doubled since 2008. Revenue climbed 14% to over $1.26 billion -- the biggest in four years.
Analysts polled by Thomson Reuters see earnings rising 8% to $1.12 a share for 2013. The estimate was recently revised up. One hurdle for the year is the cost of beef, which Texas Roadhouse expects will rise about 15%. But the company said it in its Q4 conference call that it has already locked in prices on over 80% of its beef this year.
Along with its latest quarterly report, Texas Roadhouse raised its quarterly dividend by 33% to 12 cents a share from 9 cents. That's the biggest jump since the company first started paying quarterly dividends, in 2011.
Texas Roadhouse will pay the dividend March 29 to shareholders of record March 13.
At the new annual rate of 48 cents a share, Texas Roadhouse's yield works out to 2.5%. Its yield is in the middle of the road among the 20 dividend-paying stocks in the restaurants industry group. But Texas Roadhouse has one of the best Composite Ratings among its peers.