Jim Cramer Says “Texas Roadhouse Should See Its Gross Margins Explode”

TXRH -0.83% EAT +1.33%

Texas Roadhouse, Inc. (NASDAQ:TXRH) is one of the stocks Jim Cramer discussed, along with the need for diversification. Cramer highlighted tariff cuts on Brazilian beef and their impact on the stock, as he said:

“Restaurants intrigued me now that we’re seeing commodity prices getting hit. I’m particularly partial to any chain that’s been willing to sacrifice margins to keep customers coming. You know what that means? It means Brinker, symbol EAT, parent of Chili’s, and investing club holding Texas Roadhouse. Wow. The latter’s more levered to steak than any other chain, and its sales have held up because of its refusal to take price hikes lest it alienate its core customer. So now that steak prices are coming down because the president has cut the tariffs on Brazilian beef, Texas Roadhouse should see its gross margins explode. And I don’t care that it’s up about 10 straight points.”

Pixabay/Public Domain

Texas Roadhouse, Inc. (NASDAQ:TXRH) runs and franchises casual dining restaurants under the Texas Roadhouse, Bubba’s 33, and Jaggers brands.

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Disclosure: None. This article is originally published at Insider Monkey.