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Texas Roadhouse Makes Diners, Investors Happy

Posted
3/4/2014 5:13:00 PM
By: Investor's Business Daily
Referenced Stocks:TXRH

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.