Overview
Truist Securities reduced its price target on Texas Roadhouse shares to $186 from $188 and retained a Hold rating following the restaurant chain's fourth-quarter 2025 financial report. The brokerage said it trimmed its outlook after the quarter's results missed consensus on both same-store sales and earnings per share, citing a combination of weather-related disruptions and rising input costs.
Quarterly performance and near-term indicators
Tales from the quarter include weather-driven operational inefficiencies that weighed on the company's comparable sales and labor productivity. Texas Roadhouse recorded fourth-quarter 2025 earnings per share of $1.28, which missed the consensus estimate by $0.22. Truist noted that same-store sales have started the first quarter of 2026 strongly to date, a development the firm highlighted even as it warned of margin pressure ahead.
Cost pressures and margin dynamics
Beef price inflation is a central concern for Truist, which said the rise in beef costs may be structural. The brokerage previously downgraded the stock on February 10, 2026 on this basis. The company’s gross profit margin stood at 17.8% in the reported quarter, a figure Truist and others view as evidence of ongoing cost pressures at the store level.
In response to margin headwinds, Texas Roadhouse has scheduled a more aggressive menu price increase for April, intended to support margins as costs persist. Truist said it lowered earnings estimates partly because company guidance pointed to higher-than-expected general and administrative expenses and a continued mix shift toward higher-cost steak offerings.
Valuation and analyst reactions
Texas Roadhouse currently trades at a price-to-earnings ratio of 27.6 and has a market capitalization of about $11.9 billion. InvestingPro data referenced by analysts shows eight analysts have reduced earnings forecasts for the upcoming period. Despite near-term headwinds, InvestingPro analysis referenced in the market commentary indicates the stock may be trading below its calculated Fair Value.
Other broker actions were mixed. Stephens raised its price target to $180 from $168 while keeping an Equal Weight rating. BMO Capital reduced its target to $165 from $170 but maintained a Market Perform rating. KeyBanc reiterated a Sector Weight stance and highlighted that inflation had affected store-level profitability.
Related note on Ciena
Separately, Bank of America downgraded Ciena to Neutral and removed its price target, citing concerns over valuation, peak margins and risks around slower order and backlog trends, as well as limited optionality tied to AI deployments. This action was reported alongside the coverage of restaurant-sector developments.
Outlook from Truist
Truist expects Texas Roadhouse's shares to trade in line with its historical valuation multiple over time. The brokerage's reduction in estimates and modest cut to its target reflect a combination of weather-related operating challenges, elevated beef costs that could be structural, higher G&A guidance, and a shift in sales mix toward steak that pressures margins.
Key points
- Truist lowered its price target on Texas Roadhouse to $186 from $188 and maintained a Hold rating after Q4 2025 results missed expectations.
- Beef price inflation is identified as a principal concern and may be structural, contributing to margin compression alongside weather-related labor inefficiencies.
- Company valuation metrics show a P/E of 27.6 and market capitalization near $11.9 billion; eight analysts have trimmed earnings estimates for the upcoming period.
Risks and uncertainties
- Beef price inflation - continued or structural increases in beef costs would affect restaurant margins and consumer pricing strategies.
- Operational disruptions - weather-driven labor inefficiencies and other disruptions could continue to weigh on same-store sales and profitability.
- Higher operating expenses - elevated general and administrative costs, as guided by the company, could suppress earnings momentum.