Texas Roadhouse Inc. Common Stock (TXRH)

FairStock Score: 51/100 — MIXED

Key Financials

Strengths

• Generates $190 million in annual free cash flow (1.8% yield on market cap)
• High return on equity of 29.0% demonstrating efficient capital deployment
• Established organization with 1,01,000 employees providing operational scale

Concerns

• Trades significantly above Graham Number ($55) with negative 189% margin of safety—limited downside protection

AI Analysis

Texas Roadhouse Inc. Common Stock is a mid-cap consumer cyclical company valued at $10.5 billion. The business generates $5.9 billion in annual revenue with a 1.4% net margin and $190 million in free cash flow. From a quality standpoint, Texas shows solid Piotroski F-Score of 6/9 and healthy Altman Z-Score of 4.0. On valuation, the stock is trading at a premium 26.3x earnings, with trades far above its Graham Number ($55) with no margin of safety. Growth dynamics show revenue growing at 3.1% and profit growth of -26.9%. The 1.9% dividend yield adds an income component for patient holders. Our composite FairStock Score of 51/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $190 million in annual free cash flow (1.8% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the consumer cyclical space. Sluggish 3% growth in a large-cap company leaves the stock vulnerable to de-rating if the market rotates toward higher-growth opportunities.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer