Lower Expectations For Texas Roadhouse Make A Nice Set-Up For Q3

Texas Roadhouse Inc (NASDAQ: TXRH) operates over 400 restaurant locations across the United States. While the company is benefiting from lower beef prices, decelerating SRS figures appear to be offsetting the lower costs Texas Roadhouse is experiencing.

"We are impressed with TXRH's recent performance and continue to like the company's returns, CF and growth opportunity," said analyst John Zolidis of Buckingham Research. "However we remain concerned with slowing SRS and EPS."

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Texas Roadhouse had a strong 2015 and start to the 2016, but has since given up around 24 percent of its stock price as the market becomes more cautious around some slowing trends surrounding the restaurant industry.

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Despite the concerns, Buckingham Research still likes the concept and the stock. The cautious sentiment surrounding the restaurant industry and lower expectations could set Texas Roadhouse up for a nice earnings beat in the third quarter. The company is set to release its third-quarter earnings on November 1.

Buckingham Research maintains a Neutral rating on Texas Roadhouse and trimmed its price target to $43 from $47.

At time of writing, Texas Roadhouse was down 1.57 percent Thursday.

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