Title

Earning Preview: Texas Roadhouse fourth-quarter revenue is expected to increase by 6.07%, and institutional views are bullish

Abstract

Texas Roadhouse will report fiscal fourth-quarter 2025 results on February 19, 2026 Post Market; our preview highlights a revenue estimate of $1.50 billion with year-over-year growth, an EPS estimate of $1.51, and a broadly constructive institutional stance tempered by near-term cost considerations.

Market Forecast

The market currently expects Texas Roadhouse’s fiscal fourth-quarter revenue to be about $1.50 billion, implying 6.07% year-over-year growth, with adjusted EPS around $1.51, which reflects a year-over-year change of -8.17%. On operating performance proxies, the forecast embeds EBIT of $120.29 million, a year-over-year change of -7.38%. Forecasted margin detail is not available; if provided on reporting day, the key watch-points will be gross profitability trends relative to input costs and any change in net margin cadence versus the prior quarter. The main business is company-operated restaurant and other sales, and expectations for the quarter hinge on continued guest traffic and average check stability alongside easing commodity costs to support revenue flow-through. Within the portfolio, company-operated restaurants remain the most promising segment, driven by volume, pricing, and unit growth potential; in the last reported quarter, this segment generated $1.43 billion of revenue, forming 99.50% of total sales.

Last Quarter Review

In the prior quarter, Texas Roadhouse delivered revenue of $1.44 billion, up 12.83% year over year, with a gross profit margin of 14.73%, GAAP net profit attributable to shareholders of $83.17 million, a net profit margin of 5.79%, and adjusted EPS of $1.25, representing a year-over-year change of -0.79%. A key financial highlight was that revenue modestly exceeded the prior estimate while adjusted EPS came in a bit below, an outcome consistent with solid top-line momentum balancing against cost headwinds in the model. On business mix, restaurant and other sales contributed $1.43 billion, or 99.50% of total revenue, while royalties and fees contributed $7.23 million, indicating a revenue base overwhelmingly driven by company-operated units.

Current Quarter Outlook (with major analytical insights)

Restaurant and Other Sales Outlook

Restaurant and other sales account for nearly all of Texas Roadhouse’s revenue base, so the quarter’s performance will primarily be shaped by traffic, average check trends, and store-level execution. The forecasted revenue of $1.50 billion implies 6.07% year-over-year growth into fiscal fourth-quarter 2025, which suggests the model anticipates stable throughputs and sustained demand, with modest pricing benefits likely embedded. The EPS forecast of $1.51, down 8.17% year over year, and EBIT down 7.38% year over year, signal that while revenue is expected to grow, flow-through may be pressured by cost items and a normalization of operating leverage relative to the strong prior-year base. Within the quarter, investors will look for management commentary on same-store sales components, specifically the balance between guest counts and average check. The last reported quarter’s gross margin of 14.73% and net margin of 5.79% set a recent baseline for profitability; with top-line growth still forecast positive, attention will focus on whether commodity costs, labor, and other operating expenses allow for stable or improving restaurant-level margins. Given how concentrated revenue is in company-operated restaurants, even small improvements in food cost inflation or labor efficiency can have an outsized impact on consolidated earnings metrics. Royalties and fees represent a small portion of sales at $7.23 million in the prior quarter, and thus are unlikely to materially affect the quarter’s consolidated results. The real driver remains the company-operated store base, where volume and mix—dine-in versus to-go dynamics—can influence peak capacity management and labor scheduling efficiency. Forecasts therefore imply a quarter where sales continue to expand but margin capture is monitored closely, with progress likely to be incremental in nature if cost relief continues to emerge.

Growth Vector: Company-Operated Units and Throughput Expansion

The most promising business engine is the company-operated restaurant platform, which produced $1.43 billion in the prior quarter and 99.50% of revenue. This segment offers the clearest path to structural growth via new unit openings, throughput enhancements, and targeted pricing. Forecast revenue growth of 6.07% year over year into fiscal fourth-quarter 2025 is consistent with a blend of mid-single-digit comp sales assumptions and unit growth, while forecast EBIT and EPS declines suggest the market anticipates measured margin normalization as inflationary inputs work through the P&L. Operationally, the tight linkage between traffic and labor productivity remains central. As restaurants optimize dining room turns and kitchen throughput, incremental sales can be captured with comparatively less incremental labor hours, improving four-wall economics. This dynamic can be especially beneficial when input cost inflation moderates, allowing more revenue to convert into operating income. If management communicates continued traction on these operational initiatives, it would support the case for better margin trajectory as 2026 progresses, despite a cautious EPS estimate for the current quarter. New restaurant openings add a second lever to growth. While opening costs can create near-term pressure on consolidated margins and EPS, healthy early-store sales ramps typically help mitigate dilution over time. The path to scale across company-operated units is reinforced by the brand’s consistent traffic characteristics flagged by recent institutional commentary. A constructive setup for unit expansion, paired with improving store-level efficiencies, would reinforce the long-run earnings power embedded in the model, even if the near-term quarter shows mixed margin signals.

Key Swing Factors for the Stock This Quarter

Three interlocking factors are most likely to drive stock reactions around the print and guide: commodity costs, labor inflation, and the cadence of comp sales into early 2026. Recent institutional commentary has highlighted easing beef costs as a supportive development, which—if sustained—can incrementally bolster gross margin from the 14.73% seen in the prior quarter. This relief could be partially offset by wage inflation or staffing mix adjustments, which would help maintain service levels and throughput but weigh on near-term EPS. The net effect between easing food costs and labor dynamics is critical, as the EPS forecast (-8.17% year over year) hints that the market expects cost benefits to materialize unevenly across line items this quarter. Comparable sales trends will also be scrutinized for indications that traffic resilience remains intact following a year of robust top-line expansion. The prior quarter posted 12.83% year-over-year revenue growth, and while the current quarter’s 6.07% forecast decelerates from that pace, it remains positive and consistent with a normalization toward steady growth rather than a surge. The balance between guest counts and average check will illuminate whether demand is broad-based and sustainable, and whether pricing remains within an elastic range that avoids pushing check growth at the expense of traffic. Finally, outlook commentary for 2026 can meaningfully influence valuation inputs. If management confirms a constructive view on commodities—particularly beef—and communicates a measured approach to labor while protecting guest experience, investors may gain confidence that the projected EPS softness is a near-term phenomenon rather than a trend. Conversely, if wage pressures outpace easing in food costs or if comp cadence underwhelms relative to expectations, the stock could recalibrate on margin risk rather than revenue growth. Against this backdrop, the forecast for $1.50 billion revenue with modest margin pressure encapsulates a base-case scenario where growth persists and margin supports gradually improve as cost tailwinds accumulate.

Analyst Opinions

The majority of recently published institutional views in 2026 skew bullish. Buy ratings were reiterated or initiated by several well-known institutions in January and February, citing resilient guest traffic, easing beef costs, and the potential for improved restaurant-level margins over time. UBS maintained a Buy rating with a $210.00 price target, pointing to resilient traffic and long-term margin potential even as near-term costs require attention. TD Cowen initiated a Buy with a $215.00 target, explicitly highlighting the support from easing beef costs and a balanced value proposition. Mizuho maintained a Buy with a price objective of $180.57. In contrast, a single notable downgrade to Hold with a $188.00 target arrived from Truist in February; however, the weight of current commentary remains constructive. Within the January 1 to February 12 window, the ratio of bullish to non-bullish opinions is three to one, indicating a clear bullish majority that focuses on multi-quarter margin recovery prospects and durable traffic. The bullish camp’s thesis centers on three pillars. First, demand characteristics appear durable, with commentary emphasizing consistent traffic that supports ongoing revenue growth even as compares normalize. This aligns with the market’s forecast for the current quarter’s revenue growth of 6.07% year over year and a prior-quarter performance that delivered $1.44 billion in sales, up 12.83% year over year. Second, easing beef costs have the potential to improve gross profit conversion from sales, supporting margins as the year progresses; this is an area where modest changes can have pronounced effects given the size of the restaurant and other sales line. Third, despite near-term pressures implied by the EPS and EBIT forecasts, the long-term earnings algorithm remains intact if store-level efficiencies continue to materialize and unit growth remains disciplined. These optimistic views also implicitly recognize the current quarter’s mixed signals. A projected EPS of $1.51 and EBIT of $120.29 million—both expected to be down year over year—suggest cautious near-term flow-through. Yet the Buy-rated institutions argue this is a transitional period, as cost relief is staggered across categories and timing, and as the company continues to invest in throughput and guest experience. If management’s guidance corroborates a path where commodity costs continue easing and wage inflation is managed within productivity gains, the bullish case expects that earnings power in 2026 can strengthen relative to this quarter’s baseline. From a valuation and sentiment standpoint, references to an average rating tilted to Overweight alongside price targets clustered around the high $100s and low $200s underpin the constructive tilt ahead of the print. The key validation points will be management’s commentary on the balance of traffic and check, the degree of realized food cost relief in late 2025 and early 2026, and early signals on 2026 margin cadence. Should these align with the bullish framework—steady demand and gradual margin progress—the majority view anticipates that the shares can be supported by a combination of resilient sales and improving profitability over the coming quarters.