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

TEXAS ROADHOUSE INC (NASDAQ:TXRH) stands out as a strong candidate for quality investors, meeting key criteria from our Caviar Cruise screen. The company demonstrates solid profitability, efficient capital allocation, and consistent growth—hallmarks of a high-quality business.

Key Strengths

• High Return on Invested Capital (ROIC) – TXRH delivers an impressive ROIC of 22.55%, well above our 15% threshold. This indicates efficient use of capital to generate profits.
• Strong EBIT Growth – The company has achieved a 19.65% annual EBIT growth over the past five years, outpacing its revenue growth—a sign of improving profitability.
• Healthy Profit Quality – With a five-year average profit quality of 122.8%, TXRH converts net income into free cash flow effectively, supporting financial flexibility.
• Minimal Debt Burden – The company has no debt relative to free cash flow, reinforcing financial stability.

Fundamental Highlights

Our analysis shows TXRH excels in profitability, with strong margins and returns on equity (31.45%) and assets (13.60%). While its valuation appears elevated with a P/E of 29.77, this premium reflects its consistent earnings growth and operational strength. Analysts expect continued EPS growth of 10.35% annually, though revenue growth may slow slightly.

Why It Fits Quality Investing

• Stable Growth – Revenue has grown at a 14.28% annual rate over the past five years.
• Pricing Power – Improving margins suggest the ability to pass costs to customers.
• Financial Health – No debt and strong cash flow generation reduce risk.

For more quality stock ideas, explore our Caviar Cruise screener.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own analysis before making investment decisions.