The Company
Texas Roadhouse, Inc. (TXRH) operates a full-service casual dining restaurant chain. The company operates restaurants under the Texas Roadhouse name, as well as franchises its restaurants. It also provides supervisory and administrative services for other franchise Texas Roadhouse restaurants. As of May 5, 2014, the company operated approximately 425 restaurants in 48 states, as well as in 3 countries internationally. Texas Roadhouse, Inc. was founded in 1993 and is based in Louisville, Kentucky. (Daily Chart) (Weekly Chart) | 11 September 2014 Price $27.00 1yr Target $30.47 Analysts 15 1yr Cap Gain 12.85% Dividend $0.60 Yield 2.22% 1yr Tot Return 15.07% Market Cap $1.88 Bil Payout Ratio 50.84% Beta 0.84 EPS (ttm) $1.18 EPS next yr $1.47 P/E 22.88 PEG 1.83 Debt/Equity 0.09 ROA 9.70% ROE 14.30% |
The Fundamentals
Dividends were started only a couple of years ago but based on the increasing revenues and earnings I expect that dividends will be maintained and even increased each year going forward. While I expect rate of dividend increases to eventually slow from the upper 20% level to a more seasonal mid-teen level, this is still a very desirable level for most dividend growth investors. This company could very likely be on several of the analyst's buy lists in the very near future.
Year 2015 Est 2014 Est 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 | Revenues $1.71 Bil $1.56 Bil $1.43 Bil $1.26 Bil $1.10 Bil $1.00 Bil $942.33 Mil $880.46 Mil $735.08 Mil $597.13 Mil $458.78 Mil $363.01 Mil | Earnings $1.47 $1.26 $1.13 $1.00 $0.88 $0.80 $0.67 $0.52 $0.51 $0.44 $0.42 $0.24 | Dividends $0.72 $0.60 $0.48 $0.37 $0.32 N/A N/A N/A N/A N/A N/A N/A | Payout Ratio 48.97% 47.61% 42.47% 37.00% 36.36% N/A N/A N/A N/A N/A N/A N/A |
Revenue Growth Rate 1 year = 13.49% 2 year = 14.01% 3 year = 12.52% 4 year = 11.05% 5 year = 10.19% | Earnings Growth Rate 1 year = 13.00% 2 year = 13.31% 3 year = 12.07% 4 year = 13.95% 5 year = 16.79% | Dividend Growth Rate 1 year = 29.72% 2 year = 22.47% |
The Technicals
On the weekly chart it appears a little more subdued. The RSI has not moved up as high on this chart compared to the daily chart. This indicates that the longer term trend may not be as aggressive as the shorter term trend. The MACD is also subdued and is hanging around the zero line indicating that this stock wants to go sideways long term. Finally the ADX shows that from a long term perspective, there's simply no pressure up or down.
The Competition
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Conclusion
Technically the charts are telling the investor that this stock will be a bargain if, and when, it pulls back to the $24-$25 area. The fundamentals are telling the investor that it may not get back to that level any time soon. If it gets above $27.50 and holds, this stock may run up to new all time highs.
Starting a small position at prices below $27.50 may be a prudent strategy for an investor. The stock may find resistance at this level and if so, any subsequent pullback is an opportunity to add to that small position while not having totally committed at the higher level. If instead it pushes through $27.50 on normal to greater than normal volume, the stock is probably going to go a lot higher. A breach through that level would force me to immediately commit the remainder of my funds.
I plan to start a position on this stock this week. I also plan to add to that position as quickly as possible, as funds (dividends) are deposited into my account. This stock looks like it will very quickly become an important part of my portfolio.
The Live Interactive Chart
"The Restaurant Industry", published 24 July 2014
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"DineEquity, Inc.", published 29 August 2014