TXRH

Based on a comprehensive analysis of Texas Roadhouse (TXRH), the stock presents a compelling but nuanced case.

Investment Thesis TXRH is a high-quality operator with exceptional brand strength and pristine financial health, evidenced by its zero long-term debt and highly efficient operations. However, this quality comes at a steep price, with valuation metrics like a forward P/E of 33.2 and EV/EBITDA of 79.0 indicating that significant future growth is already priced in. The stock's recent strong technical performance also places it near its 52-week high, increasing short-term pullback risk. Investors are essentially paying a premium for a best-in-class company that is already executing at a high level.

Buy Recommendation Texas Roadhouse is a strong HOLD for existing investors, as its operational excellence justifies a premium, but the current valuation limits near-term upside potential. For new investors, it is advisable to wait for a more attractive entry point, such as a market-wide downturn or a temporary company-specific setback that brings the price closer to its historical valuation range. The underlying business is excellent, but patience is required to buy this quality at a more reasonable price. This is not investment advice, for reference only.

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis provided, the 12-month outlook for Texas Roadhouse (TXRH) is as follows:

The primary catalysts for TXRH remain its exceptional operational execution, strong brand loyalty, and unit growth, which should continue to drive industry-leading comparable sales and profitability. The key risk is overwhelmingly its elevated valuation, which leaves the stock vulnerable to a significant correction if growth merely meets, rather than exceeds, high market expectations or if the broader market multiples contract. Given the substantial premium, the stock is more likely to trade within a wide range, with a potential upside ceiling around $210-$220 contingent on stellar earnings beats, but with a higher probability of a pullback toward the $160-$170 range if sentiment sours on high-multiple stocks.

Wall Street Consensus

Most Wall Street analysts are optimistic about TXRH's 12-month outlook, with consensus target around $189.09, indicating expected upside potential.

Overall, TXRH has investment potential but also faces challenges. Here are key factors to weigh before investing.

Of course. Here is the technical analysis of TXRH's price performance:

Overall Assessment TXRH has demonstrated strong bullish momentum, significantly outperforming the broader market over the recent quarter.

Short-term Performance The stock shows robust short-term strength, with substantial returns of over 13% for both the 1-month and 3-month periods. This performance is particularly impressive as it represents a significant 9.74% outperformance against the market benchmark, indicating powerful independent bullish momentum.

Current Position Trading at $189.74, TXRH sits in the upper 75th percentile of its 52-week range ($148.73 - $199.99), suggesting it is approaching overbought territory. With the current price being just over 5% from its 52-week high, the risk of a pullback has increased, especially considering its maximum drawdown of -20.8% demonstrates the stock's capacity for volatility despite its slightly defensive beta of 0.898.

Of course. Here is a fundamental analysis of Texas Roadhouse (TXRH) based on the provided data.

**1. Revenue & Profitability**

Texas Roadhouse demonstrates solid revenue generation but faces pressure on profitability. The Q3 2025 revenue was $1.44 billion, with a gross profit margin of 14.7%. However, profitability metrics are modest, with an operating income ratio of 6.7% and a net profit margin of 5.8%. The effective tax rate of 13.1% indicates efficient tax management, but operating expenses are consuming a significant portion of gross profit, leaving narrower bottom-line results.

**2. Financial Health**

The company exhibits a very strong financial health position. Notably, it carries no long-term debt (long-term debt to capitalization is 0%), resulting in a low debt-to-equity ratio of approximately 0.64. While the current ratio of 0.36 appears weak, this is common for asset-light restaurant operators and is offset by a robust cash flow-to-debt ratio of 0.15. The negative cash conversion cycle of -3.2 days is highly efficient, showing the company collects from customers before it needs to pay its suppliers.

**3. Operational Efficiency**

Operational efficiency is a key strength, highlighted by exceptional inventory and receivables turnover rates of 26.9 and 23.5, respectively, which are indicative of effective supply chain and cash collection management. However, the return on equity (ROE) of 5.7% and return on assets (ROA) of 2.5% are relatively low, suggesting that while operations are streamlined, the company is generating only moderate returns on its invested capital and assets.

Valuation Level: Texas Roadhouse appears richly valued across traditional metrics, with elevated ratios including a forward PE of 33.2, a high PB of 8.5, and an extremely high EV/EBITDA of 79.0. These multiples suggest significant growth expectations are already priced into the stock. The negative PEG ratio, stemming from a decline in earnings growth estimates, is a notable cautionary signal regarding its premium valuation.

Peer Comparison: Without specific industry average data for comparison, a definitive peer benchmark cannot be established. However, these ratios are typically high for the restaurant sector, indicating TXRH likely trades at a substantial premium relative to broader industry peers. Further analysis with comparable company data would be required to precisely quantify this valuation gap.

Based on the provided metrics, TXRH demonstrates moderate volatility risk with a Beta slightly below 1 (0.898), indicating marginally lower sensitivity to broad market movements than typical stocks. However, the stock's maximum drawdown of -20.8% over the past year suggests moderate downside risk. Overall, TXRH's volatility profile appears manageable but warrants monitoring for broader volatility shocks.

Regarding other risks, the absence of short interest implies very low expectations for significant downside pressure from short sellers. Additionally, with no liquidity concerns highlighted, the stock appears to benefit from solid investor confidence. This dynamic suggests that market sentiment currently views TXRH as relatively stable, with minimal perceived downside pressure from short-term trades.