Texas Roadhouse Q3 Profit Misses Street; Shares Down 10%

(RTTNews) - Shares of Texas Roadhouse Inc. (TXRH) slipped over 10% on Monday's extended session after the restaurant chain reported a third-quarter profit that fell short of Wall Street estimates, hurt largely by lower restaurant margin reflecting higher labor costs.

Third-quarter profit for the quarter dropped to $29.1 million or $0.40 per share from $31.0 million or $0.43 per share last year. On average, 20 analysts polled by Thomson Reuters expected earnings of $0.54 per share for the quarter.

Revenues for the quarter grew 10% to $594.6 million from $540.5 million last year. Analysts expected revenues of $594.0 million for the quarter.

Comparable restaurant sales increased 5.5% at company restaurants and 4.2% at domestic franchise restaurants.

Restaurant margin, as a percentage of restaurant and other sales, decreased 157 basis points to 16.2%, primarily due to higher labor costs, including the impact of insurance reserve adjustments.

CEO Kent Taylor said, "Our top-line momentum continued this quarter highlighted by positive comparable restaurant sales, driven by positive traffic growth. However, restaurant-level performance continues to be pressured by higher labor costs. Despite the earnings decline this quarter, 2018 is still shaping up to be a good year for Texas Roadhouse."

TXRH closed Monday's regular trading at $66.81, down $0.31 or 0.46% on the Nasdaq. The stock further slipped $7.23 or 10.82% in the after-hours trade.