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

Zacks Equity Research
Moody's (MCO) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Restoration Hardware (RH) closed the most recent trading day at $133.36, moving +0.57% from the previous trading session. This change outpaced the S&P 500's 0.15% loss on the day. Elsewhere, the Dow gained 0.21%, while the tech-heavy Nasdaq lost 0.81%.

Heading into today, shares of the furniture and housewares company had gained 10.67% over the past month, outpacing the Retail-Wholesale sector's gain of 8.6% and the S&P 500's gain of 6.55% in that time.

Investors will be hoping for strength from RH as it approaches its next earnings release, which is expected to be March 26, 2019. The company is expected to report EPS of $2.87, up 69.82% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $687.33 million, up 2.54% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.40 per share and revenue of $2.53 billion, which would represent changes of +175.41% and +3.49%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for RH. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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 has moved 0.02% higher. RH is holding a Zacks Rank of #1 (Strong Buy) right now.

In terms of valuation, RH is currently trading at a Forward P/E ratio of 15.79. This valuation marks a premium compared to its industry's average Forward P/E of 15.23.

Also, we should mention that RH has a PEG ratio of 0.9. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Retail - Home Furnishings industry currently had an average PEG ratio of 0.9 as of yesterday's close.

The Retail - Home Furnishings industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 187, putting it in the bottom 27% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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