Texas Roadhouse, Inc. TXRH has been a rare standout in an otherwise challenging year for the restaurant industry. Defying industry headwinds, TXRH stock has skyrocketed an impressive 47.4% in 2024, far outpacing the industry and the S&P 500’s modest growth of 3.7% and 26.3%, respectively.

On Monday, the stock closed at $180.19, 12.5% below its 52-week high but 56% above its 52-week low. In 2024, TXRH outperformed industry players like Wingstop Inc. WING, Domino's Pizza, Inc. DPZ and El Pollo Loco Holdings, Inc.’s LOCO rise of 11.9%, 2.1% and 31%, respectively.

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Decoding Tailwinds Behind TXRH’s Rally

The company has been benefiting from robust same-store sales growth. Comparable sales increased 8.5% in third-quarter 2024, driven by a 3.8% traffic increase and a 4.7% rise in average checks. This trend continued into the fourth quarter with 8.3% sales growth in the first four weeks. The company’s ability to maintain strong traffic growth is underpinned by its commitment to providing a high-quality dining experience.

Unit growth continues to aid the company. Seven company-owned restaurants and three international franchise locations were opened in third-quarter 2024. During the third quarter conference call, the company said that 30 new openings across all brands are expected in 2024, with a similar target for 2025.

Texas Roadhouse has announced a tentative agreement to acquire 13 restaurants from one of its largest domestic franchisees, with the transaction expected to close in early 2025. On the international front, the company’s franchise partners plan to open seven new Texas Roadhouse locations next year. Meanwhile, domestic Jaggers franchise partners are targeting the addition of three new locations, highlighting the brand’s ongoing growth and expansion efforts.

Texas Roadhouse continues to invest in technology, aiming to improve operational efficiency and customer experience. In the second quarter of 2024, the company completed the rollout of its "Roadie First" technology system, which enhances mobile accessibility for employees.

Moreover, Texas Roadhouse is investing in digital kitchen upgrades, with a full rollout expected by 2025. These enhancements aim to streamline service, reduce wait times and boost overall efficiency. This will not only improve margins but also strengthen its competitive edge in a fast-evolving dining landscape.

The company is also benefiting from lower-than-expected beef costs, contributing to less than 1% commodity inflation in 2024.

Estimate Revision Favors TXRH Stock

Indicating the positive sentiment around TXRH, the Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 60 days, analysts have raised their estimates for the next year by 0.7% to $7.22 per share.

Conclusion

Texas Roadhouse stands out as a top performer in the restaurant industry, driven by strong same-store sales growth, strategic unit expansion and operational enhancements. The company’s commitment to delivering a high-quality dining experience has fueled consistent traffic growth, while investments in technology, such as digital kitchen upgrades and employee-focused systems, enhance efficiency and customer satisfaction. Strategic acquisitions and planned openings further underscore its growth potential. Additionally, favorable commodity cost trends and improving inflation dynamics strengthen its margin outlook.

With positive earnings estimate revisions indicating growing confidence, Texas Roadhouse offers a compelling investment opportunity for long-term growth. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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