Is Restoration Hardware (RH) Set to Beat Earnings Estimates?
From big-box giant Target T to upscale department store chain Nordstrom JWN, retailers have been forced to adapt to changing consumer habits. But as investors know, overarching narratives and trends don’t impact all companies, and certainly not at all times. A recent example from one industry bellwether actually helped paint a picture of retail optimism.
Just last week, Macy’s M posted solid fourth-quarter 2017 results that marked the company’s first quarterly sales growth in nearly three years. Shares of Macy’s have climbed since then as part of a larger turnaround backed by renewed investor confidence.
Fellow higher-end retailer Restoration Hardware RH is also expected to post strong fourth-quarter results. Restoration Hardware is currently projected to see its Q4 sales, which includes the crucial holiday shopping period, jump by 14.45%.
And the home décor and furniture company’s top-line growth pales in comparison to RH’s current bottom-line growth projections.
Restoration Hardware is expected to see its quarterly earnings hit $1.56 per share, which would mark 129% growth from the year-ago period. But what are the chances the company actually beats this estimate? To answer that, we’ll need to take a closer look.
Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to beat. Zacks Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst estimates.
This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Restoration Hardware is currently a Zacks Rank #1 (Strong Buy) and sports an “A” grade for Growth in our Style Scores system. Coupled with its Earnings ESP of 1.77%, which means earnings estimates have been higher directly ahead of RH’s Q4 results, investors should consider the stock as one that could easily beat our consensus mark.
Investors should also note that Restoration Hardware has topped or matched earnings estimates in each of the trailing six quarters.
Restoration Hardware is set to report its Q4 and fiscal 2017 earnings results after the market closes on Thursday, March 8.
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AT&T Inc. (T) : Free Stock Analysis Report
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