Why Texas Roadhouse Shares Took Off

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Investors were ordering up shares of Texas Roadhouse (NASDAQ: TXRH  ) to go today, as the barbecue chain jumped as much as 14% today after a strong quarterly report.

So what: Net income jumped 39% at the restaurant chain. as EPS climbed to $0.37, $0.02 ahead of analyst estimates. Revenue was also slightly ahead of expectations, gaining 11% to $359.7 million, as Texas Roadhouse said the number of transactions increased, a trend that has continued into the current quarter. Same-store sales increased modestly at about 4%, and the company said it plans to increase its store count by about 7% this year.

Now what: This was more of a solid report rather than a stellar one, as the 10% finish might indicate. Shares seem to be a bit overvalued following the jump, with a P/E of 23.5, moderate growth prospects, and no real competitive advantage. I'd wait for Texas Roadhouse to cool off before taking a bite.

Hungry for seconds? Add Texas Roadhouse to your Watchist  to get all the latest updates.


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