Shares of Texas Roadhouse plunged 9.3% to $144.81 in pre-market trading on May 7, as investors rushed to lock in gains ahead of the casual dining chain's Q1 2026 earnings report, due after the close today. The selloff comes despite the stock trading well below its ~$194 average analyst price target, raising a sharp question: is this a buying opportunity or a warning that Wall Street's patience with serial earnings misses is wearing thin?

  • Four Straight Quarters of Misses Have Rattled Confidence. Texas Roadhouse trades at 28.6x forward earnings despite missing estimates in four straight quarters — Q1 through Q4 2025 — with misses ranging from 2.2% to 3.3%.

The Q4 miss was the worst: the company earned $1.28 per share versus the $1.53 consensus, compared to $1.73 a year earlier. With analysts expecting $1.86 EPS and $1.64 billion in revenue for Q1, today's 9% pre-market drop signals real fear of a fifth consecutive shortfall.

  • Beef Costs Are Eating Into Margins — Literally. Management signaled mid-teens beef cost increases for 2026, with beef representing roughly 35% of food costs. Executives declined to quantify hedging positions but acknowledged the cattle cycle remains tight.

In Q4, restaurant margins fell 309 basis points to 13.9% as commodity inflation hit 9.5%. That's the core problem: sales keep growing, but rising costs eat the profit before it reaches shareholders.

  • The Growth Story Still Has Believers. As of year-end 2025, the company operated 816 restaurants across 49 states and ten countries, spanning its three brands.

Management targets ~35 new company-owned openings in 2026.

Wall Street expects Q1 revenue to grow 13% year over year , a meaningful acceleration. Full-year 2025 revenue reached nearly $5.9 billion with 4.9% same-store sales growth.

  • Analysts Are Trimming But Not Abandoning Ship. In recent weeks, Mizuho cut its target to $190 from $200, Stifel dropped to $170 from $188, and Citi lowered to $176 from $184 — while BofA raised to $225 from $216.

Across 19 analysts, the consensus remains "Buy" with a $194.53 average target , implying ~34% upside from today's depressed price. The split reveals a market debating whether inflation headwinds are cyclical or structural.

At $144.81, the stock is flirting with its 52-week low near $154. Tonight's report won't just be about one quarter — it will test whether Texas Roadhouse can prove its growth engine still outruns its cost problem.