Key Points
- The GLP-1 weight-loss craze has reignited interest in high protein and low-carb diets like the carnivore and ketogenic diets.
- Texas Roadhouse is the leading casual dining steakhouse in the United States, with 740 locations in 49 states, known for its hand-cut steaks and sides made from scratch, from bacon bits and rolls to salad dressings.
- Outback Steakhouse is well-known for its Australian-themed restaurants serving budget-friendly steak and seafood entrees and its world-famous Bloomin' Onion appetizers.
- 5 stocks we like better than Darden Restaurants
The Ozempic and GLP-1 weight loss trend parallels the artificial intelligence (AI) mania that's gone mainstream viral, sending stocks like Novo Nordisk A/S NYSE: NVO and Nvidia Corp. NASDAQ: NVDA through the roof. While GLP-1 users report amazing weight loss results, like Oprah Winfrey losing 60 pounds, users continue to report the side effects of nausea, vomiting, gastrointestinal maladies and the return of weight once getting off the treatment.
Many people are looking beyond the medical sector for alternative diets and lifestyles.
Rise of the carnivores
Due to soaring costs, many insurers and employers have limited access to these drugs. The GLP-1 drugs have reignited the weight-loss trend and the search for the perfect diet.
People who don't want to resort to expensive and potentially harmful GLP-1 drugs have taken up more holistic diets like the carnivore diet, which involves eating only animal proteins and fats. Ketogenic diets allow for a limited amount of carbohydrates from vegetables. Here are two restaurant stocks benefiting from the carnivore and keto diet trends.
Texas Roadhouse Inc.
Texas Roadhouse Inc. NASDAQ: TXRH is one of the largest casual dining steakhouse operators in the United States, offering a combination of value and quality in a uniquely Texas cowboy-style setting. The company operates under its namesake Texas Roadhouse Steakhouse and Bubba's and Jaggers brands. Its 740 locations in 49 states and 10 foreign countries are company-owned and operated, with around 100 franchised.
The steaks are hand-cut, and the sides (including bacon bits, croutons and salad dressings) are made from scratch, which sets them apart from competitors that use frozen or premade options.
The company also serves chicken and seafood entrees. It has a mobile app and VIP Club loyalty program, where customers can use points to earn rewards like gift cards. It competes directly with Darden Restaurants Inc. NYSE: DRI, which owns LongHorn Steakhouse.
Results keep sizzling
On February 15, Texas Roadhouse reported Q4 2023 EPS of $1.08, beating consensus analyst estimates by 2 cents. Revenues grew 15.3% year-over-year (YOY) to $1.16 billion, matching analyst estimates.
Company-owned restaurant sales rose 9.9% YOY and 8.9% YOY at franchise locations. Average weekly sales were $141,653, of which $17,793 were to-go sales compared to $130,176, on which $16,414 were to-go sales in the year-ago period.
Margins increased 21.4% YOY to $176.7 million from $145.6 million in the year-ago period. The company opened 12 company restaurants and seven franchise restaurants in the quarter.
Dividend raise
The company bought back 40,787 shares for $4.8 million in the quarter. The board of directors authorized an 11% increase in the dividend for a quarterly cash payment of 61 cents per share. It will be distributed on March 26 to shareholders of record at the close of March 13, 2024.
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Forecasts for 2024
Company-owned comparable restaurant sales for the first 50 days of Q1 2024 rose 6.8% YOY. The company will implement price increases of 2.2% in late March. The company expects positive comparable restaurant sales growth in 2024.
Commodity cost inflation should be around 5%. Store week growth should be around 8%, including a 2% benefit from a 53rd week. Wage and labor inflation should rise from 4% to 5%, with total capex spending between $340 million and $350 million.
Texas Roadhouse CEO Jerry Morgan commented, "As we move into 2024, our development pipeline is progressing as we anticipated, with 19 new company restaurants under construction. We expect a more evenly distributed opening schedule will create efficiencies and positively impact store week growth. Our strong balance sheet and disciplined capital allocation strategy continue to provide us the necessary flexibility to fund new store growth and return capital to our shareholders."
Texas Roadhouse analyst ratings and price targets are at MarketBeat. Look for Texas Roadhouse’s peer and competitor stocks with the MarketBeat stock screener.
Daily bull flag breakout
The daily candlestick chart on TXRH illustrates a bull flag breakout pattern. The flagpole formed on the daily market structure low (MSL) breakout through the $120.31 trigger on January 22. Shares rose to a peak at $135.29 ahead of Q4 2023 earnings.
The strong report formed a gap to the $145.45 as it surged to new all-time highs at $152.55. The daily relative strength index surged through the overbought 70-band as it hovered around the 79-band. Pullback support levels are at $145.45, $135.29, $130.15 and $120.31.
Outback Steakhouse
Bloomin' Brands Inc. NASDAQ: BLMN is a casual dining restaurant operator with four brands: Outback Steakhouse and Fleming's Prime Steakhouse & Wine Bar, Bonefish Grill and Carrabba's Italian Grill.
Outback Steakhouse is an Australian-themed steakhouse with a menu of various budget-conscious hand-cut steaks, seafood items and comfort food like its famous fried Bloomin' Onion appetizer. Outback has locations in over 19 countries.
As of December 31, 2023, Outback Steakhouse had 688 locations in the United States, comprising 562 company-owned and 126 franchised locations. Bloomin' Brands has 300 international Outback Steakhouses for a total of 330 internationally. Systemwide total company-owned restaurants are 1,189, with 291 systemwide total franchised locations.
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Half-full glass
On November 23, 2023, Bloomin' Brands reported Q4 2023 EPS of 75 cents, beating analyst expectations by 6 cents. Revenues grew 9.1% YoY to $1.19 billion versus $1.2 billion consensus analyst estimates.
The company issued downside guidance for Q1 2023 of EPS between 70 cents and 75 cents versus 93 cents consensus estimates. United States comparable sales are expected to fall 0.5% to 2%. Full-year 2024 EPS is expected between $2.15 to $2.66 versus $2.61 consensus estimates. The board of directors declared a 24-cent-per-share dividend payable on March 20 to shareholders on record at the close of business on March 6.
Bloomin' Brands CEO David Deo stated it will spend more money on marketing Outback Steakhouse in 2024. The company opened six new domestic restaurants in 2023 and expects to triple that number in 2024.
Deo stated the company has accommodated customers who are being more careful with their discretionary budgets, "Our current LTO, a three-course Aussie dinner for $16.99, offers the customer a great value. We will continue to be thoughtful about our approach to overall pricing and discounting. The 'No Rules, Just Right' campaign and the marketing investment are just the start of the work underway at Outback. There'll be more to unveil in our strategy at Outback in the coming quarters."
Check out Bloomin' Brands analyst ratings and price targets at MarketBeat.
Daily symmetrical triangle
The daily candlestick chart on BLMN illustrates a symmetrical triangle pattern comprised of a descending upper trendline and an ascending lower trendline. BLMN draws closer to a definitive breakout or breakdown as they meet at the apex point. The daily MSL was triggered at $25.01. Pullback support levels are at $25.73, $25, $24.33 and $22.92.
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