Why Texas Roadhouse's Stock Fell 26% in March
The popular chain of steakhouses says stores remain open amidst the COVID-19 outbreak.
April 8, 2020

This article was originally written by Royston Yang of The Motley Fool

Shares of Texas Roadhouse (NASDAQ:TXRH) fell by 26% in March, according to data from S&P Global Market Intelligence.

The steakhouse chain remains one of my favorite restaurant stocks during this COVID-19 outbreak, having reported no full restaurant closures thus far.



So what

Though many states in the USA have implemented limited or no in-restaurant dine-ins, Texas Roadhouse had announced in mid-March that it hasn't closed any domestic restaurants because of the outbreak. These restaurants continue to operate in a full, limited, or to-go (i.e., take-out) capacity even if their dining room areas may be closed.

The company has even ramped up its to-go, family pack, and curbside services, providing food for families as they hunker down to contain the spread of the pathogen. Texas Roadhouse is not just doing its part for the community, but it has also adapted its business operations to this new reality.

However, because of the fluid situation around COVID-19, the company is withdrawing its financial guidance for fiscal 2020. It has also increased its cash position by drawing down on its $190 million revolving credit facility, with an option to increase this facility by another $200 million.

CEO Kent Taylor will also forgo his base salary and incentive bonus from March 18 until Jan 7, 2021. That money will be used to assist his employees during these challenging times. This is a great example of a CEO who's willing to make personal sacrifices to ensure that workers are taken care of.








Is Tesla's neural network the key to autonomous driving?










Now what

Investors need to brace for more bad news should the pandemic worsen in the USA. Texas Roadhouse may even have to completely shut some of its stores in certain states if state governments mandate so.

However, with its strong cash kitty and no debt, I believe the restaurant chain should be able to survive and even come out stronger after this crisis.










MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.

Royston Yang has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Texas Roadhouse. The Motley Fool has a disclosure policy.



The Home of Successful Investing.

© 2023 MyWallSt Ltd. All rights reserved.


Services

Content

Social

Company

Support


This website is operated by MyWallSt Ltd (“MyWallSt”). MyWallSt is a publisher and a technology platform, not a registered broker-dealer or registered investment adviser, and does not provide investment advice. All information provided by MyWallSt Limited is of a general nature for information and education purposes, and you should not construe any such information as investment advice. MyWallSt Limited does not take your specific needs, investment objectives or financial situation into consideration, and any investments mentioned may not be suitable for you. You should always carry out your own independent verification of facts and data before making any investment decisions, as we cannot guarantee the accuracy or completeness of any information we publish and any opinions that we publish may be wrong and may change at any time without notice. If you are unsure of any investment decision you should seek a professional financial advisor. MyWallSt Limited is not a registered investment adviser and we do not provide regulated investment advice or recommendations. MyWallSt Limited is not regulated by the Central Bank of Ireland. MyWallSt Limited may provide hyperlinks to web sites operated by third parties. Your use of third party web sites and content, including without limitation, your use of any information, data, advertising, products, or other materials on or available through such web sites, is at your own risk and is subject to the third parties' terms of use.