Should you buy Texas Roadhouse (TXRH)?
Updated
Texas Roadhouse offers a high-quality restaurant business with a strong Piotroski score and volume accumulation, but consecutive earnings misses and a confirmed death cross create meaningful near-term headwinds that limit the risk-reward to the downside.
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
Engine methodology range
Range computation requires sufficient peer-comparable data; available for tickers with peer_count ≥3.
What the engine is tracking
| Pillar | Expectation | Trend |
|---|---|---|
Texas Roadhouse has missed analyst earnings estimates in 3 of the last 4 quarters, with an average negative surprise of -3.83%, signaling execution challenges in translating revenue into expected profit. Earnings | Earnings beat rate improves to at least 3 out of 4 quarters over the next year with positive average surprise. | →Stable |
| CounterRestaurant margins are notoriously cyclical and one prior beat may reflect one-off cost controls rather than a lasting trend reversal. | ||
The stock is trading 1.5% below its 200-day moving average and has triggered a confirmed death cross pattern, indicating that sellers have dominated price action over the medium term. Warnings | Price reclaims and sustains a level above the 200-day moving average within 12 months. | →Stable |
| CounterRising on-balance volume suggests institutional buyers are quietly accumulating even as price lags, meaning the death cross may be a lagging indicator. | ||
With only 6.3% upside to the analyst price target and 7.3% downside to the stop level, the reward-to-risk ratio stands at 0.87, which falls below the minimum threshold of 1.5 required to justify new exposure. Targets | Upside to analyst target grows above 15% as the stock pulls back or analyst targets are raised. | →Stable |
| CounterAnalyst targets are consensus averages and may lag fundamental improvements, meaning the true forward opportunity could exceed what the current target implies. | ||
Texas Roadhouse has missed analyst earnings estimates in 3 of the last 4 quarters, with an average negative surprise of -3.83%, signaling execution challenges in translating revenue into expected profit.
→Stable- Expectation
- Earnings beat rate improves to at least 3 out of 4 quarters over the next year with positive average surprise.
CounterRestaurant margins are notoriously cyclical and one prior beat may reflect one-off cost controls rather than a lasting trend reversal.
The stock is trading 1.5% below its 200-day moving average and has triggered a confirmed death cross pattern, indicating that sellers have dominated price action over the medium term.
→Stable- Expectation
- Price reclaims and sustains a level above the 200-day moving average within 12 months.
CounterRising on-balance volume suggests institutional buyers are quietly accumulating even as price lags, meaning the death cross may be a lagging indicator.
With only 6.3% upside to the analyst price target and 7.3% downside to the stop level, the reward-to-risk ratio stands at 0.87, which falls below the minimum threshold of 1.5 required to justify new exposure.
→Stable- Expectation
- Upside to analyst target grows above 15% as the stock pulls back or analyst targets are raised.
CounterAnalyst targets are consensus averages and may lag fundamental improvements, meaning the true forward opportunity could exceed what the current target implies.
▸ Show 1 more pillar▾ Show fewer
Texas Roadhouse earns a Piotroski F-Score of 7 out of 9 and delivers a return on equity of 29%, reflecting solid financial health and capital efficiency despite recent earnings disappointments.
→Stable- Expectation
- Return on equity remains above 20% and Piotroski score stays at 7 or higher over the next 12 months.
CounterFree cash flow is only 46% of net income, which is a red flag suggesting earnings quality is weaker than headline profitability implies.
→ Full pillar scorecard with all 4 pillars + per-dimension breakdown
When this thesis breaks
Falsifiable conditions per pillar — any one trip warrants review independent of price action. Engine-derived; not personalized advice.
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Texas Roadhouse has missed analyst earnings estimates in 3 of the last 4 quarters, with an average negative surprise of -3.83%, signaling execution challenges in translating revenue into expected profit.
Trip ifAverage earnings surprise falls below -5% in at least 2 of the next 4 quarters, extending the miss streak.
- P2The stock is trading 1.5% below its 200-day moving average and has triggered a confirmed death cross pattern, indicating that sellers have dominated price action over the medium term.
Trip ifPrice drops below $155, more than 7% below the current $167.54, confirming accelerating downtrend.
- P3With only 6.3% upside to the analyst price target and 7.3% downside to the stop level, the reward-to-risk ratio stands at 0.87, which falls below the minimum threshold of 1.5 required to justify new exposure.
Trip ifReward-to-risk ratio remains below 1.0 for more than 2 consecutive quarters as price approaches the analyst target.
- P4Texas Roadhouse earns a Piotroski F-Score of 7 out of 9 and delivers a return on equity of 29%, reflecting solid financial health and capital efficiency despite recent earnings disappointments.
Trip ifReturn on equity falls below 20% or free cash flow conversion drops below 30% of net income.
How the engine reached this verdict
TrendMatrix's engine output for Texas Roadhouse, Inc. (TXRH) is SELL_IF_HOLDING with medium conviction, score 5.2/10 at $187.02. The F-path SELL output reflects an overall score of 5.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. Asymmetry R:R of -0.33 is supplementary context, not the trigger.
The engine's exit framework anchors to a tactical sell band near $187.02, with structural invalidation at $174.54. The asymmetric R:R against a reversal hypothesis is -0.27 — the upside scenario exists, but it requires multiple structural gates to flip; the downside scenario requires only one more disappointment. The engine's sizing output: 0.5% of portfolio at this asymmetry level (none-conviction tier).
On the bear side: Analyst target reached - limited upside remaining; Consecutive earnings misses (3). Active engine warnings: V8: Target reached (-4.7% upside), V9 Gate Failed: ASYMMETRY:-0.3=NEGATIVE.
The dominant failed gate is reward-to-risk (NEGATIVE). SELL flips back toward HOLD if reward-to-risk recovers above its threshold AND a co-failing gate also clears. The strongest-cleared gate today is MOMENTUM:6.9>=5.5.
For the full 10-dimension breakdown + V9 gate detail: Why TrendMatrix rates TXRH — 10-dimension breakdown →
Bear case
- ▸Analyst target reached - limited upside remaining
- ▸Consecutive earnings misses (3)