The miss barely dents momentum. Texas Roadhouse posted Q4 2025 EPS of $1.25, falling short of the $1.28 consensus by 2.2%, marking the casual dining chain’s fourth consecutive quarterly miss. Yet shares climbed 1.6% in after-hours trading to $189.60, as investors focused on robust unit economics and the company’s demonstrated pricing power amid rising beef costs. Revenue hit $5.83B for the full year, up 12.8% year-over-year, driven by aggressive new unit growth and steady traffic.
Unit volumes tell the real story. Weekly sales averaged $162,000 at flagship Texas Roadhouse locations during Q3—well above industry averages—while Bubba’s 33 generated $119,000 per week and the newer Jaggers concept topped $75,000. These figures underscore operational execution despite margin pressure from commodity inflation. Interim CFO Keith Humpich noted that “our operators drove strong sales performance in the third quarter with all three brands delivering same-store sales growth,” a critical metric as the chain targets 30+ new restaurants annually through 2026.
Beef inflation looms large. Management signaled mid-teens beef cost increases for 2026 if the overall commodity basket rises high single digits—a structural headwind given beef represents roughly 35% of food costs. On the earnings call, executives declined to quantify hedging positions but acknowledged the cattle cycle remains tight. One analyst pressed on whether beef inflation is “structural or transitory,” to which management responded they won’t “guess on the front-end” until the cycle turns. This uncertainty adds risk to 2026 margin forecasts, though the company’s history of measured menu pricing suggests room to offset costs without alienating consumers.
The stock defies the pattern. Texas Roadhouse trades at 28.6x forward earnings despite missing estimates in four straight quarters (Q1 through Q4 2025 misses ranged from 2.2% to 3.3%). The market’s willingness to look past near-term EPS shortfalls reflects confidence in the long-term unit growth story and a 7.5% profit margin that outpaces casual dining peers. Shares have gained 12.2% over the past three months, outperforming the broader restaurant index by 600 basis points.
Analyst support remains firm. Ten firms participated in the Q3 call, including BofA Securities, Morgan Stanley, and Barclays, with consensus recommendations still at “buy” and a $196.85 average price target—4.4% above current levels. The company’s ability to sustain $162,000 weekly sales per location while expanding into smaller markets with Jaggers (which operates at lower sales volumes but higher margins) gives analysts conviction that same-store sales growth can continue even as comps moderate from pandemic-era peaks.
This article was generated using AlphaStreet’s proprietary financial analysis technology and reviewed by our editorial team.