BTIG Impressed With Consistent Sales Outperformance From Texas Roadhouse

Texas Roadhouse Inc TXRH reported its 2Q16 results, with the EPS ahead of the consensus and the estimate.

BTIG’s Peter Saleh maintains a Neutral rating on the company.

“We remain impressed with Texas Roadhouse’s consistent sales outperformance given what have been weaker and choppy industry trends recently,” said Saleh.

Near-Term Uncertainty

Although Texas Roadhouse’s sales might be showing signs of weakening in recent times, the outlook for the next few months appears increasingly uncertain.

The analyst believes this uncertainty could be offset to a large extent by the continuation of food cost deflation into 2017.

Related Link: Texas Roadhouse Misses revenue Estimates; Shares Fall

2Q16 Results

The company reported its 2Q16 EPS at $0.47, marginally ahead of the estimate and the consensus, driven by lower food costs.

Comparable sales grew 4.5 percent during the quarter, again beating the estimate, comprising of 2.9 percent traffic and 1.6 percent average check growth, with relatively consistent geographic trends.

“Comps continued to outperform the industry by a sizable gap though monthly results seemed to show a more recent slowing in sales trends,” said Saleh.

The analyst now expects food costs to decline 2.5–3.0 percent in 2016, and management stated that there were early indications that suggested favorable costs in 2017.

The EPS estimates for 2016 and 2017 have been raised to reflect the earnings beat and outlook for food costs.

Full ratings data available on Benzinga Pro.