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
From a fundamental perspective the company's numbers are about as clean and consistent as I can ever expect from any company. Revenues have been increasing at a regular rate for the last 9 years. Notice the consistency in the revenue growth rates below. Similarly, the earnings have been increasing each of the last nine year. In fact the revenues as well as the earnings have not stagnated or declined at all during this period. This kind of regularity is rarely found in my analysis.
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.
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
It's obvious from the charts below that this stock is being pushed higher by investors. It's most obvious on the daily chart. The price of the stock is moving higher and taking the Bollinger Bands with it. It's pushing the upper band higher and it's also staying above the 10 day and 20 day moving average. The RSI is above the 70 line, the MACD is above both the zero line and the signal line, and the ADX lines are in the correct order and moving higher. Everything on the daily chart says this stock is overpriced but it also says that it's not running out of steam either.
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.
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.
 Daily Chart |  Weekly Chart |
The Competition
Texas Roadhouse, Inc is part of the Restaurant Industry which is part of the Services Sector of the economy. Below are a few of the major corporations included in this industry. They each pay at least a minimal dividend and they are listed in the order of their market capitalization.
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Conclusion
In terms of its fundamentals, Texas Roadhouse appears to be an excellent investment for dividend growth investors. It's a company that has a dividend in excess of 2.2% and a dividend growth rate well into the mid-twenty percent range. Even with an expected slowdown of the dividend growth rate to a rate commensurate with its revenue and earnings growth rates in the low to mid-teens, this is a company that is highly desirable.
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.
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
Additional Articles of Interest
"The Restaurant Industry", published 24 July 2014
"Cracker Barrel Old Country Store", published 13 August 2014
"McDonald's Corp", published 16 August 2014
"Brinker International", published 25 August 2014
"DineEquity, Inc.", published 29 August 2014
"The Restaurant Industry", published 24 July 2014
"Cracker Barrel Old Country Store", published 13 August 2014
"McDonald's Corp", published 16 August 2014
"Brinker International", published 25 August 2014
"DineEquity, Inc.", published 29 August 2014
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