Value
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.5 |
| P/S | 9.0 |
| EV/EBITDA | 1.1 |
| Fwd P/E | 5.4 |
| PEG | 4.2 |
| Analyst target | 4.0 |
- ▸Forward P/E: 23.5x
- ▸PEG: 2.32
TXRH · Why this verdict
Why Texas Roadhouse (TXRH) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
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.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| 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 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. Quality breakdown | Return on equity remains above 20% and Piotroski score stays at 7 or higher over the next 12 months. | →Stable |
| CounterFree cash flow is only 46% of net income, which is a red flag suggesting earnings quality is weaker than headline profitability 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.
→StableEarnings
- 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.
→StableWarnings
- 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.
→StableTargets
- 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.
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.
→StableQuality breakdown
- 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.
Per-dimension breakdown
Quality
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 9.6 |
| ROA | 6.0 |
| Gross margin | 0.0 |
| Op margin | 3.6 |
| Net margin | 3.4 |
| Current ratio | 1.8 |
| FCF quality | 3.7 |
| Moat | 6.8 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 29%
- ▸Earnings quality RED FLAG: 46% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
4.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.7 |
| EPS growth | 4.0 |
Momentum
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.3 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 2.4 |
- ▸Overbought (RSI 74)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 5.9 |
| erm sentiment | 5.2 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $1,033,847 (0.009% of mkt cap)
Peer rank
5.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.8 |
| quality rank | 4.8 |
| growth rank | 7.0 |
Technical
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.2 |
| 52w position | 9.1 |
Risk (lower is worse)
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.1 |
| days to cover | 7.9 |
| volatility | 4.2 |
| put call | 8.8 |
| implied vol | 6.5 |
| max pain risk | 3.0 |
| beta | 8.2 |
| debt equity | 6.9 |
- ▸Above max pain $165
Catalyst
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.6 |
| dividend safety | 6.0 |
- ▸Earnings concerns: 1B/3M
- ▸Dividend: 167.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.9>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:43d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.3=NEGATIVE
Warning (1)
- DEATH_CROSS:momentum=6.9>=5.0 recovering
Reward-to-Risk
-0.33
Upside
-4.7%
Downside
14.4%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 74
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.1 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 6.9) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.3=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.33 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 6.9, Risk (lower is worse) at 6.6, and Sentiment at 6.4; the weakest are Technical at 3.1, Catalyst at 3.3, and Quality at 4.7. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.33 and an engine sizing output of AVOID.
What would invalidate the thesis
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.