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Category: Stock Market and Texas Roadhouse (TXRH)
Date: 3 August 2020 Stock Price of Texas Roadhouse: $56.19 We take a look at the 2nd quarter earnings release of their 2020 fiscal year of Texas Roadhouse, a food franchise group 610 restaurants in 49 states. The group has been hit hard by the Covid-10 pandemic. Revenues declined by -31% and the group recorded a loss of -$33.5 million for the quarter compared to the same quarter of the previous year.
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Let me start by thanking our operators and support teams for their hard work, dedication, courage, and commitment during the most challenging times we’ve experienced. Our operators were able to quickly transition nearly 600 full-service restaurants to a To-Go only model in March - Kent Taylor, Founder and CEO."
About Texas Roadhouse (TXRH)
Texas Roadhouse, Inc. is a growing restaurant company operating in the casual dining segment. Our founder, chairman and chief executive officer, W. Kent Taylor, started the business in 1993 with the opening of the first Texas Roadhouse restaurant in Clarksville, Indiana. Today, the Company operates over 610 restaurants system-wide in 49 states and 10 foreign countries, including 581 Texas Roadhouse restaurants and 28 Bubba’s 33 restaurants. In addition, we operate two restaurants outside of the casual dining segment.
Overview of Texas Roadhouse 2nd quarter 2020 earnings report
The data provided below refers to the latest quarter's data unless specified otherwise
- Total revenue: $476.425 million (down from $689.828 million from the same quarter of the previous year)
- Total revenue decreased by -31 % over the last 12 months
- Total operating expenses: $523.743 million (down from $636.545 million for the same quarter of the previous year)
- Total operating expenses decreased by -17.7% over the last 12 months
- Net loss: -$33.553 million (down from $44.845 million for the same quarter of the previous year)
- Diluted loss per share: -$0.48 (down from $0.63 for the same quarter of the previous year)
- PE ratio of Texas Roadhouse: Since the group is loss making a PE ratio cannot be calculated
- Diluted weighted-average shares outstanding: 69.361 million (down from 71.733 million for the same quarter of the previous year)
- Cash and cash equivalents: 282.493 million
- Cash and cash equivalents per share: $4.67
- Cash and cash equivalents makes up 7.2% of Texas Roadhouse's market capital
- Cash and cash equivalents makes up 13.3% of Texas Roadhouse's current assets
- Goodwill in Texas Roadhouse: $124.748 million
- Goodwill makes up 5.8% of Texas Roadhouse' total assets
- Goodwill per Texas Roadhouse stock: $1.79
- Stockholders equity of Texas Roadhouse: $868.021 million
- Stockholders equity per share: $12.51
- So Texas Roadhouse is trading at 4.5 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For some perspective the firms in the S&P 500 trades at an average price to book value of 3.7
- Cash generated from operations (for 6 months) : $61.845 million
- Cash generated from operations per share: $0.89
Texas Roadhouse's management commentary on their 2nd quarter 2020 earnings report
LOUISVILLE, KY. (August 3, 2020) – Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 26 week periods ended June 30, 2020 and provided a business update in response to the continued COVID-19 pandemic
Statement from Kent Taylor, Founder and CEO
Let me start by thanking our operators and support teams for their hard work, dedication, courage, and commitment during the most challenging times we’ve experienced. Our operators were able to quickly transition nearly 600 full-service restaurants to a To-Go only model in March and then transition the majority of those same restaurants back to a hybrid operating model of limited capacity dining rooms together with enhanced To-Go service in May and June. Along the way, they came up with creative ways to drive traffic through increased outdoor dining, executing To-Go, managing wait times and other initiatives, with a priority of keeping our employees and guests safe. As we began re-opening our dining rooms in May, it was clear that our guests were excited to return. Since then, we have been encouraged to see our sales trend favorably through a solid combination of re-opened dining rooms, outdoor dining, and strong To-Go sales. With these increased sales, we have also seen our cashflows steadily improve. While we know there are challenges that remain relating to the pandemic and its impact on our business, I know that our operators will continue to face them head on
Statement from Kent Taylor, Founder and CEO
Let me start by thanking our operators and support teams for their hard work, dedication, courage, and commitment during the most challenging times we’ve experienced. Our operators were able to quickly transition nearly 600 full-service restaurants to a To-Go only model in March and then transition the majority of those same restaurants back to a hybrid operating model of limited capacity dining rooms together with enhanced To-Go service in May and June. Along the way, they came up with creative ways to drive traffic through increased outdoor dining, executing To-Go, managing wait times and other initiatives, with a priority of keeping our employees and guests safe. As we began re-opening our dining rooms in May, it was clear that our guests were excited to return. Since then, we have been encouraged to see our sales trend favorably through a solid combination of re-opened dining rooms, outdoor dining, and strong To-Go sales. With these increased sales, we have also seen our cashflows steadily improve. While we know there are challenges that remain relating to the pandemic and its impact on our business, I know that our operators will continue to face them head on
Business Update
Comparable restaurant sales during the second quarter were impacted by the re-opening of dining rooms across the country. For the April period, the Company operated under a fully To-Go model, while the May and June periods included various capacity restrictions in the dining rooms
For the July period, comparable restaurant sales at company restaurants decreased 13.0% and average weekly sales at all restaurants were $86,062. The decrease in average weekly sales was impacted by the decision of some states to further limit capacity or require dining rooms to be re-closed, the negative impact of the shift in the Fourth of July holiday, and normal seasonality. As of the end of July, over 95% of company restaurants had dining rooms operating in a limited capacity.
For the second quarter, the Company’s cash on hand position increased approximately $51.9 million due to working capital inflows, proceeds from the revolving credit facility and increased sales performance, partially offset by cash used for capital expenditures. At the current level of restaurant sales, the Company expects to continue to generate cash from operations and continue restaurant development. As of today, the Company has opened 10 restaurants and has resumed construction on an additional 12 restaurants. The Company currently expects to open as many as six restaurants in the third quarter, with two of these already opened. To the extent that state and local guidelines begin to further reduce capacity and/or re-close dining rooms, the Company will evaluate further development and reduce capital expenditures accordingly.
2020 Outlook
As previously announced, due to the current unprecedented global market and economic conditions, the Company withdrew the financial outlook for the fiscal year ending December 29, 2020. The Company cannot yet reasonably estimate the impact to the business and therefore cannot provide an updated outlook.
Comparable restaurant sales during the second quarter were impacted by the re-opening of dining rooms across the country. For the April period, the Company operated under a fully To-Go model, while the May and June periods included various capacity restrictions in the dining rooms
For the July period, comparable restaurant sales at company restaurants decreased 13.0% and average weekly sales at all restaurants were $86,062. The decrease in average weekly sales was impacted by the decision of some states to further limit capacity or require dining rooms to be re-closed, the negative impact of the shift in the Fourth of July holiday, and normal seasonality. As of the end of July, over 95% of company restaurants had dining rooms operating in a limited capacity.
For the second quarter, the Company’s cash on hand position increased approximately $51.9 million due to working capital inflows, proceeds from the revolving credit facility and increased sales performance, partially offset by cash used for capital expenditures. At the current level of restaurant sales, the Company expects to continue to generate cash from operations and continue restaurant development. As of today, the Company has opened 10 restaurants and has resumed construction on an additional 12 restaurants. The Company currently expects to open as many as six restaurants in the third quarter, with two of these already opened. To the extent that state and local guidelines begin to further reduce capacity and/or re-close dining rooms, the Company will evaluate further development and reduce capital expenditures accordingly.
2020 Outlook
As previously announced, due to the current unprecedented global market and economic conditions, the Company withdrew the financial outlook for the fiscal year ending December 29, 2020. The Company cannot yet reasonably estimate the impact to the business and therefore cannot provide an updated outlook.
Texas Roadhouse (NASDAQ:TXRH) stock price history
The image below, obtained from Google, shows the stock price history of Texas Roadhouse (TXRH) for the last 5 years. And it's been a pretty good time for Texas Roadhouse stockholders. 5 years ago Texas Roadhouse stock was trading at around $39 and its currently trading at $56.19 a stock. That is a very flat return of 44% provided to Texas Roadhouse stock price over the last 5 years.
The stock of Texas Roadhouse is trading at closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of Texas Roadhouse stock is positive at this point in time.
The stock of Texas Roadhouse is trading at closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of Texas Roadhouse stock is positive at this point in time.
Texas Roadhouse (TXRH) stock vs Cracker Barrel stock performance over the last 5 years
The image below shows the stock price performance of Texas Roadhouse (TXRH) and Cracker Barrel (CBRL) over the last 5 years.
- Texas Roadhouse (TXRH): 54.41%
- Cracker Barrel (CBRL): -24.5%
Recent coverage of Texas Roadhouse (TXRH)
The extract below discusses the latest on Texas Roadhouse as obtained from Simplywall.st
It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Texas Roadhouse, Inc. (NASDAQ:TXRH), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year’.
The Last 12 Months Of Insider Transactions At Texas Roadhouse
In the last twelve months, the biggest single sale by an insider was when the Lead Independent Director, Gregory Moore, sold US$1.3m worth of shares at a price of US$55.53 per share. So we know that an insider sold shares at around the present share price of US$50.11. While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn’t a major concern, though it’s hardly a good sign. Gregory Moore was the only individual insider to sell over the last year.
The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Read the full article here
It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Texas Roadhouse, Inc. (NASDAQ:TXRH), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year’.
The Last 12 Months Of Insider Transactions At Texas Roadhouse
In the last twelve months, the biggest single sale by an insider was when the Lead Independent Director, Gregory Moore, sold US$1.3m worth of shares at a price of US$55.53 per share. So we know that an insider sold shares at around the present share price of US$50.11. While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn’t a major concern, though it’s hardly a good sign. Gregory Moore was the only individual insider to sell over the last year.
The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Read the full article here
Texas Roadhouse (TXRH) latest stock valuation
So based on the 2nd quarter 2020 earnings report and fiscal guidance of Texas Roadhouse what do we value Texas Roadhouse stock at? Based on the earnings report released by the group our valuation model provides a target price (full value price) for Texas Roadhouse at $50.10 a stock . We therefore believe the stock of Texas Roadhouse is overvalued.
We suggest long term fundamental and value investors look to enter the stock at least 10% below our current target price (full value price) of $50.10. Therefore we believe a good entry point into Texas Roadhouse is at $45.10or below. We expect the stock of Texas Roadhouse to pull back to levels closer to our target price in coming weeks and months.
We suggest long term fundamental and value investors look to enter the stock at least 10% below our current target price (full value price) of $50.10. Therefore we believe a good entry point into Texas Roadhouse is at $45.10or below. We expect the stock of Texas Roadhouse to pull back to levels closer to our target price in coming weeks and months.
Next earnings release of Texas Roadhouse (TXRH)
It is expected that Texas Roadhouse will release their 3rd quarter 2020 earnings in October 2020