Being a Texas Roadhouse shareholder has been a very rewarding experience over the past five years. The restaurant chain’s stock is up 570% from its pandemic low at $25.15 per share. That’s hardly surprising, given that company sales increased 44% in 2021 and then continued to compound at a 16% clip in the following three years.
But 2025 is expected to see revenue growth decelerate to around 10%. This probably explains why at $167.50, Texas Roadhouse stock is down 18.7% from last year’s record high of $206. As analysts, our job is to put this dip into the bigger Elliott Wave context to see if it is a buying opportunity. The weekly chart below will help us with that task.
It reveals that the current drop fits in the position of wave (4) of III, following a sequence of first and second waves, which led to a big and fast surge in wave (3). The Covid-19 crash was the culmination of wave II, which had been in progress since September, 2018.
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If this count is correct, Texas Roadhouse stock has entered a sequence of fourth and fifth waves now. Wave ‘c’ of (4) might drag the price further down in the short run, but wave (5) of III should then lift it to new records. Then, waves IV down and V up would have to complete the impulse pattern, before the bears show up again for a much bigger three-wave correction.
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