Texas Roadhouse (TXRH): Buy, Sell, or Hold Post Q3 Earnings?

Texas Roadhouse (TXRH) reported strong Q3 2024 earnings, with revenue growth of 13.5% and a 32.5% increase in diluted EPS. The company's expansion strategy, menu price increases, and operational efficiency have contributed to its earnings growth. However, investors must consider the broader market trends and geopolitical dynamics when deciding whether to buy, sell, or hold TXRH shares.



Texas Roadhouse's revenue growth has been steady over the past five years, with an average annual increase of 13.5%. The Q3 2024 performance aligns with this trend, indicating a strong and stable business model. The company's EPS and net income growth rates have outpaced both the broader restaurant industry and the S&P 500 over the past five years, suggesting that TXRH is a solid investment option.



Texas Roadhouse's expansion strategy has significantly contributed to its revenue growth in Q3. The company opened 10 new restaurants, with 7 company-owned and 3 franchised, bringing its total to over 770 locations. This growth aligns with its strategic goal of footprint expansion both domestically and abroad, driving revenue increases and shareholder value. Additionally, the company reported an 8.5% increase in comparable sales for company-owned restaurants and a 7.2% increase for domestic franchises, reflecting ongoing consumer demand and brand resonance.

Menu price increases and operational efficiency have played a significant role in Texas Roadhouse's earnings growth. In Q3 2024, the company increased menu prices by approximately 0.9%, helping to manage inflationary pressure while maintaining its value proposition. This strategic pricing, coupled with improved labor productivity, contributed to a rise in restaurant margin percentage from 14.6% to 16.0%. The company's focus on operational efficiency and selective pricing has enabled it to navigate inflationary challenges and drive earnings growth.



Investors should also consider the broader market trends and geopolitical dynamics when evaluating TXRH shares. The resurgence of the "Trump Trade" may impact certain industry sectors and financial assets, which are expected to benefit from Trump's policies of lower taxes and less regulation. However, the potential implications of a Trump victory on various financial sectors and assets remain uncertain.



In conclusion, Texas Roadhouse's strong Q3 2024 earnings and steady revenue growth make it an attractive investment option. However, investors must consider the broader market trends and geopolitical dynamics when deciding whether to buy, sell, or hold TXRH shares. A balanced and analytical approach to investing, considering multiple perspectives and factors, is essential for making informed decisions in today's dynamic market.