Texas Roadhouse (TXRH) PT Lowered to $37 at Buckingham Research Following 4Q EPS Miss, Estimates Cut

Buckingham Research Group analyst John Zolidis maintains Neutral rating and lowers price target on Texas Roadhouse Inc. (NASDAQ: TXRH) to $37 (from $43), suggesting industry trends negatively impacted performance, as the company offered 2016 fourth quarter EPS well below expectations, resulting in a lowering of 2017 estimates.

Zolidis comments, "We have much respect for TXRH’s long run of strong SSS growth and margin expansion. Unfortunately, trends at the restaurants are not immune to industry dynamics and same-store sales slowed to only 1.2% in 4Q16 with negative comps in December, representing the slowest rate of growth since 2010. While comps are modestly positive QTD, it seems clear that investors cannot expect a going-forward growth rate that is similar to what has been enjoyed over the past several years. Accordingly, we believe TXRH should trade at lower multiples. This could set up a buying opportunity but it is difficult to justify any urgency given the earnings reset, weakness in trends and ongoing labor pressures."

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