With COVID-19, shares of this chain dropped alongside the market. But the company used smart strategies to support its businesses during the pandemic. Now, as the economy normalizes, we think the company is well-positioned to capitalize on its popular offerings to attract more dine-in, pick-up and takeout customers.
The stock trades at 20.6 times the company’s 2023 earnings forecast.
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TEXAS ROADHOUSE (Nasdaq symbol TXRH; texasroadhouse.com) is a full-service, casual-dining restaurant chain with 685 locations spread across 49 U.S. states and 10 foreign countries. Each of those restaurants operates under one of three banners—Texas Roadhouse (643 locations), sports restaurant Bubba’s 33 (38), and Jaggers (4). Jaggers is a new fast-food concept featuring hamburgers, chicken, milkshakes and salads made from scratch.
In the quarter ended September 27, 2022, sales jumped 14.3%, to $993.3 million from $868.9 million a year earlier. As the U.S. economy further reopened, same-store sales rose 8.2% for company-owned restaurants and 6.7% for U.S. franchise locations. Texas Roadhouse made $62.3 million, or $0.93 a share. That was up 18.5% from $52.6 million, or $0.75. Profits rose despite higher costs driven by inflation.
Growth Stocks: New capabilities helped restore the dividend payout
During the pandemic, the company successfully expanded its takeout, pick-up and delivery business. Its own mobile ordering app has also encouraged repeat business. Not only that, the addition of new delivery channels and digital capabilities positions the company and its shares to move even higher as the economy further normalizes.
With the March 2020 payment, Texas Roadhouse handed investors a 20.0% rise in the quarterly dividend. But it then suspended paying dividends to conserve cash.
However, the company reinstated the payment with a quarterly cash dividend of $0.40 per share in June 2021. Subsequently, Texas Roadhouse increased its quarterly payout by 15.0% with the March 2022 payment to $0.46 a share. The stock now yields 1.9%.
Recommendation in Power Growth Investor: Texas Roadhouse Inc. is a buy.