Texas Roadhouse has been sizzling on Wall Street and in the casual-dining restaurant space where it operates. Its stock, hovering near an all-time high, has risen 14.5% since February 22, when it served up fourth-quarter results with double-digit sales and profit gains that topped views and gave solid guidance for 2016.
Add to that expectations for food cost deflation this year and forecasts for the company’s biggest earnings growth in years, and you have appetizing prospects for Texas Roadhouse.
After several years of significant beef inflation, the company expects food cost deflation this year, driven mainly by beef. Texas Roadhouse has fixedprice arrangements on about 80% of its beef needs for this year and roughly 65% of its overall cost of sales. As a result, the company expects a 1% to 2% food cost decline in 2016.
TXRH is a Cabot Top Ten Trader stock.