Shaun Currie, CFA
Long/short equity, hedge fund analyst, momentum

High Expectations, Even Higher Stock Price: Texas Roadhouse Should Fall At Least 20%

Texas Roadhouse (NASDAQ:TXRH), the national chain of casual dining restaurants, has had a strong run this year (stock is up 50% YTD). This run, though impressive, has pushed the stock higher than reasonable expectations can support. Consensus estimates, considering the recent slowdown in consumer spending trends and the fact that TXRH is one of the most EPS sensitive restaurant chains to changes in comps and costs, have set too high a bar for revenue and margins going forward. Furthermore, the company has been repurchasing shares since 2008, but stopped in the latest quarter due to the stock's price. This is a clear signal by management as to their opinion on the valuation of the stock. Furthermore, sales from...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details