Restoration Hardware Holdings Inc. (RH)
Our coverage:

Restoration Hardware (RH) earnings: end to the short sentiment?

Royston Roche | 6:13 pm ET, 03 Dec 2018

Restoration Hardware Holdings Inc. (RH) shares are trading at $149, up 27%. The company is announcing its quarterly earnings results on Tuesday after the market close, and it rallied today because of the trade-war truce between President Trump and Xi.  What's driving RH stock price? What's RH stock price forecast?

RH is a home-furnishings company. The stock has performed well this year: it generated a return of 19% in the past six months. The board of directors has authorized a $700 million share repurchase program, which will be funded with the company’s existing cash, cash flow, and borrowings from the existing credit facilities.

Investors are showing interest in the company because of its strong growth in profits. On the other hand, a few bearish investors worry about low-single-digit revenue growth numbers.  Last quarter’s revenue rose 4% to $640.80 million and earnings per share came at $2.49 compared to $0.65 for the same period last year.

Third-quarter results will be released after market close on December 04, 2018.  Analysts expect the company to earn $1.27 per share on revenue of $632.18 million.  The company beat analysts’ EPS estimates but missed revenue estimates in the previous three quarters.

Over the last month, Restoration Hardware Holdings Inc. (RH) returned -3.28%.

Restoration Hardware Holdings Inc. (RH) short share of float is 101.73%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.

Restoration Hardware Holdings Inc. (RH) average analyst price target ($146.83) is 33.37% above its current price ($110.09).

For the latest price and information on Restoration Hardware Holdings Inc., please visit Finstead and search for "RH price" or "RH news".

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Restoration Hardware: Higher Margins Ahead?

Carla Olson | 3:56 pm ET, 06 Dec 2017

RH home furnishings

Restoration Hardware (NYSE: RH) reported third-quarter results that were roughly in line with its November update, calling for sales of $592 million and EPS of $1.03, above the company’s initial take in September. Sales of $592 million and EPS of $1.04 were supported by store sales growth of 12% and a direct-to-consumer sales rise of 3%, with same-store sales ticking up 6% on top of a 6% decline in the year-ago period

The Firm’s change to its business model has likely placed it on track to reach higher operating margins than previously assumed (10% versus 8.5% prior).

Gross margin performance in the quarter was solid, expanding 460 basis points to 36.9% after contracting 440 basis points in third-quarter 2016, lapping the SKU rationalization that was undertaken in 2016. 

The SG&A ratio was a bit better than we anticipated, at 28.8%, ticking down a modest 20 basis points, but still inflated from 2015 levels as the Company reinvests in improving the supply chain. 

While we expect healthy operating margin gains in 2018, with RH returning to more normalized levels, we expect gains to moderate thereafter, with operating margins reaching about 10% over our long-term outlook.

Over the last year, RH has returned +183.00%. This return is higher than Services Sector (10.92%), Home Furnishing Stores Industry (25.02%), S&P 500 (19.27%) returns.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Restoration Hardware Holdings Inc. (RH) Buy or Sell Stock Guide

Updated at: 4:04 am ET, 25 Nov 2018

The analysis below may be helpful to you if you have any of the following questions about RH stock:

  • Is RH a buy or a sell?
  • Should I sell or hold RH stock today?
  • Is RH a good buy / a good investment?
  • What are RH analyst opinions, recommendations, ratings?

Here are RH stock buy reasons/signals:

1. The firm is focused on its retail transformation in North America. As new product lines are introduced into the larger footprint, sales to new demographic segments could rise faster than we anticipate.

2. With locations currently only in the U.S. and Canada, longer-term international opportunities could provide significant location and revenue growth and rising brand awareness globally.

3. Around half of revenue is generated through direct-to-consumer channels. This helps minimize the expense of a brick-and-mortar footprint and maximize operating margins.

4. On May 27, 2016, the company acquired a controlling interest in Design Investors WW Acquisition Company which owns the business, operating under the name “Waterworks“, for $119.9 million. RH owns over 90% of the total equity interest in Waterworks. Notably, Waterworks is the only complete bath and kitchen business offering fittings, fixtures, furniture, furnishings, accessories, lighting, hardware and surfaces under one brand in the market.

5. In 2016, the company transformed its business from a promotional to a membership model (RH Members Program), which is expected to enhance its brand, streamline operations and enhance customer experience. The membership model has eliminated the frantic buying patterns and associated returns, exchanges and canceled orders. This is expected to contribute to improved financial performance through higher conversion of demand into revenues, improved margins and lower costs.

6. RH pursues an aggressive share repurchase strategy. The company repurchased 20.2 million shares of common stock in fiscal 2017 at an average price of $49.46.

7. RH’s products primarily focus on home furnishings products and thus demand for its products is related to the performance of the broader housing market. Positives like an improving economy, modest wage growth, low unemployment levels, solid consumer confidence and a tight supply situation raise optimism about the housing sector’s performance. As such, demand for RH’s products should increase as well, driving revenues.

8. RH PEG ratio (P/E adjusted for growth) is 0.40, and it’s low compared to its industry peers’ PEG ratios.

9. RH average analyst price target ($146.83) is above its current price ($110.09).

Here are RH stock sell reasons/signals:

1. Low customer switching costs, along with the proliferation of e-commerce and mass-merchant competitors, could pressure long-term margin expansion. The rise of high-end discounters like One Kings Lane could disproportionately affect RH's market share.

2. Weakness in the housing markets could weigh on top- and bottom-line growth as new homeowners represent a meaningful portion of home-related purchases.

3. Increased promotional activity has created a challenging environment for nearly all types of retailers, including home furnishing retailers, and could persist longer than we forecast.

4. RH’s business highly depends on global trade. In fiscal 2016, the company sourced approximately 88% of its merchandise from outside the U.S., including 78% from Asia, the majority of which originated from China. Thus, any economic or regulatory changes in the foreign countries will affect RH’s business.

5. The home furnishings sector is highly competitive. RH competes with interior design trade and specialty stores, antique dealers, national and regional home furnishing retailers and department stores. In addition, the company competes with mail order catalogs and online retailers focused on home furnishings.

6. RH’s valuation looks a bit stretched when compared to the industry average. Looking at the company’s price-to-earnings (P/E) ratio, the company is currently trading at 29.5, higher than the industry’s average of 22.3.

7. RH profitability is declining. The YoY profit margin change was -4.07pp.

8. RH Price/Book ratio is 18.85, and it’s high compared to its industry peers’ P/B ratios.

9. RH short share of float is 101.73%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.

10. RH short interest (days to cover the shorts) ratio is 6.25. The stock garners more short interest than the average industry, sector or S&P 500 stock.

What are your thoughts on RH?

If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finstead Bites, please send us an email at hi@finstead.com.


Try Finstead: the fastest way to get market data and insights on stocks, ETFs, mutual funds, and cryptocurrencies