Is Texas Roadhouse stock worth the premium price?
Texas Roadhouse, Inc. (NASDAQ:TXRH) is an American restaurant company that operates mostly in the casual dining segment. Its restaurants specialize in a Texan and Southwestern cuisine styles, with 678 locations in 49 states and 10 countries, including 637 Texas Roadhouse, 37 Bubba’s 33, and four Jaggers locations.
Earlier this month, Texas Roadhouse announced the payment of a 46 cents per share cash dividend. The payment will be distributed on Sept. 23 to shareholders of record at the close of business on Sept. 7. Currently, TXRH offers a dividend yield of 1.94% at a forward dividend of $1.84.
Texas Roadhouse stock price has increased about 5% over the past 12 months, and TXRH is up 39% since bottoming at a 52-week low of $68.58 in mid-June. Additionally, shares of TXRH have gained 6% in price year-to-date, and have grown by 15% over the past month, now trading just 2% off its 52-week high of $97.43 reached last November.
As a result, Texas Roadhouse stock’s valuation continues to be rich, at a forward price-earnings ratio of 25.91, and a price-sales ratio of 1.75. Moreover, TXRH holds a weak balance sheet, with $180.41 million in cash and $756.93 million in total debt.
Nonetheless, the restaurant business has generated considerable and consistent annual top- and bottom-line growth in recent years, with the exception of 2020 due to the Covid-19 pandemic. For 2020, TXRH saw a 13% decline in revenues and an 80% drop in net income.
Still, Texas Roadhouse managed to generate 54% yearly revenue growth, and 60% yearly net income growth since 2018. What's more, the company is expected to finish 2022 with a 15% jump in revenues. TXRH is also estimated to grow revenues 8.5% for 2023, making Texas Roadhouse stock's valuation appear more attractive for investors.