Markets

Restoration Hardware (RH) Gains As Market Dips: What You Should Know

Restoration Hardware (RH) closed at $187.11 in the latest trading session, marking a +0.33% move from the prior day. This move outpaced the S&P 500's daily loss of 0.08%. Elsewhere, the Dow lost 0.07%, while the tech-heavy Nasdaq lost 0.59%.

Heading into today, shares of the furniture and housewares company had gained 9.17% over the past month, outpacing the Retail-Wholesale sector's gain of 3.2% and the S&P 500's gain of 2.7% in that time.

RH will be looking to display strength as it nears its next earnings release. On that day, RH is projected to report earnings of $2.21 per share, which would represent year-over-year growth of 27.75%. Our most recent consensus estimate is calling for quarterly revenue of $675.57 million, up 5.8% from the year-ago period.

RH's full-year Zacks Consensus Estimates are calling for earnings of $10.81 per share and revenue of $2.69 billion. These results would represent year-over-year changes of +26.58% and +6.98%, respectively.

Investors should also note any recent changes to analyst estimates for RH. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. RH is holding a Zacks Rank of #1 (Strong Buy) right now.

Looking at its valuation, RH is holding a Forward P/E ratio of 17.26. This represents a premium compared to its industry's average Forward P/E of 15.59.

Also, we should mention that RH has a PEG ratio of 1.38. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Retail - Home Furnishings stocks are, on average, holding a PEG ratio of 1.38 based on yesterday's closing prices.

The Retail - Home Furnishings industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 25, putting it in the top 10% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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