Texas Roadhouse Inc (NASDAQ:TXRH) Excels in Caviar Cruise Stock Screen with High ROIC and Strong Earnings

The Caviar Cruise stock screening method provides a structured way to find good investments using measurable financial data. This strategy, based on ideas from Belgian author Luc Kroeze, looks for companies with steady sales and earnings increases, high returns on capital used, acceptable debt, and good cash generation. Investors who use this method look for businesses with lasting competitive strengths and superior operations that can create value over time, not just short-term gains.

TEXAS ROADHOUSE INC (NASDAQ:TXRH) appears as a notable candidate from this screening process, satisfying a number of important points that these investors look for. The restaurant chain shows very good operational results with an EBIT growth rate of 19.65% over the last five years, far surpassing the method's 5% minimum. This large earnings growth points to solid operational effectiveness and pricing ability, two traits that are important for this style of investing as they indicate lasting competitive strengths.

The company's return on invested capital without cash, goodwill, and intangibles is a high 36.66%, more than twice the screening's 15% need. This measure is especially significant for these investors because it shows how well management uses capital to produce earnings. Texas Roadhouse's high ROIC indicates the company has solid operational benefits and effective capital use that build good value for shareholders.

Financial strength is another point where Texas Roadhouse does very well based on the Caviar Cruise measures. The company has a debt-to-free cash flow ratio of 0.0, showing no debt and placing it comfortably inside the acceptable limit of 0-5 years. This lack of debt offers important financial options and lowers risk, letting the company handle economic declines more successfully, a key factor for long-term investors.

Earnings quality is another positive point, with the company reaching a five-year average of 122.83%, much higher than the 75% minimum. This measure, which looks at the change of accounting profits into real cash flow, shows high-quality earnings and lowers the chance of accounting issues. The company's skill in creating cash far above reported net income suggests solid operational effectiveness and careful accounting methods.

While the company's sales growth of 3.74% over five years is a bit under the 5% screening minimum, this should be viewed next to its outstanding earnings growth and margin improvement. The large difference between sales growth and EBIT growth indicates the company has effectively bettered operational effectiveness and reached cost benefits, often more important than simple top-line growth for these investors.

According to the detailed fundamental analysis report, Texas Roadhouse gets a 6 out of 10 total, with especially good results in profitability (score 8) where it does very well in return measures including ROIC of 27.30% that beats 95.42% of industry competitors. The company shows excellent past growth with EPS increasing at 21.34% per year and sales at 14.28% per year over recent years. Financial health shows mixed outcomes with perfect solvency from no debt but with worrying liquidity ratios, while valuation seems fair compared to industry and market averages.

The company's restaurant ideas, Texas Roadhouse, Bubba's 33, and Jaggers, show several qualitative traits these investors want, including clear business models, strong brand awareness, and operational reliability across its 635 locations. The company's employment of 95,000 people and established history since its 2004 IPO give more confidence about operational maturity and management skill.

For investors wanting to look at other companies that satisfy the Caviar Cruise criteria, more screening results can be found using this customized stock screener.

This analysis is provided for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions. Past performance does not guarantee future results, and investing in stocks involves risk including potential loss of principal.