TEXAS ROADHOUSE INC (NASDAQ:TXRH) – A Quality Stock Worth Considering

TEXAS ROADHOUSE INC (NASDAQ:TXRH) stands out as a potential candidate for quality investors, according to our Caviar Cruise stock screener. The company demonstrates strong profitability, healthy financials, and consistent growth, making it an interesting option for those focused on long-term holdings.

Key Strengths

• High Return on Invested Capital (ROIC): With an ROIC (excluding cash and goodwill) of 22.9%, TXRH efficiently generates profits from its capital investments, outperforming most peers in the industry.
• Strong Profit Growth: EBIT has grown at a 19.7% annual rate over the past five years, well above the 5% threshold set by the Caviar Cruise screen. This indicates improving operational efficiency.
• Healthy Cash Flow Conversion: The company’s five-year average profit quality (free cash flow to net income) stands at 122.8%, meaning it converts earnings into cash effectively.
• Minimal Debt Burden: TXRH has no debt, placing it in a strong financial position with no leverage concerns.
• Revenue Stability: While revenue growth has moderated, analysts still expect future growth, supporting the case for continued expansion.

Fundamental Analysis Summary

The fundamental report rates TXRH a 7 out of 10, highlighting its strengths in profitability and financial health. Key takeaways include:

• Profitability: High ROIC (18.9%), strong margins, and consistent earnings growth.
• Financial Health: No debt, improving solvency metrics, and reliable cash flow.
• Valuation: The stock trades at a premium (P/E of 29.3), which may be justified by its quality metrics.
• Growth Outlook: Earnings are expected to grow at 10.4% annually, though revenue growth may slow.

Our Caviar Cruise screener provides more quality stock ideas updated daily.

Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.