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

Zacks Equity Research

Restoration Hardware (RH) closed the most recent trading day at $208.61, moving -0.07% from the previous trading session. This change lagged the S&P 500's daily gain of 0.73%. At the same time, the Dow added 0.51%, and the tech-heavy Nasdaq gained 1.34%.

Coming into today, shares of the furniture and housewares company had lost 1.3% in the past month. In that same time, the Retail-Wholesale sector gained 0.31%, while the S&P 500 0%.

Investors will be hoping for strength from RH as it approaches its next earnings release. In that report, analysts expect RH to post earnings of $3.58 per share. This would mark year-over-year growth of 19.33%. Meanwhile, our latest consensus estimate is calling for revenue of $709.33 million, up 5.58% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $11.56 per share and revenue of $2.69 billion, which would represent changes of +35.36% and +7.21%, respectively, from the prior year.

Any recent changes to analyst estimates for RH should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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 remained stagnant. RH currently has a Zacks Rank of #1 (Strong Buy).

Looking at its valuation, RH is holding a Forward P/E ratio of 18.06. Its industry sports an average Forward P/E of 15.45, so we one might conclude that RH is trading at a premium comparatively.

It is also worth noting that RH currently has a PEG ratio of 1.02. 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 was holding an average PEG ratio of 0.86 at yesterday's closing price.

The Retail - Home Furnishings industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 179, which puts it in the bottom 30% 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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