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

Zacks Equity Research

In the latest trading session, Restoration Hardware (RH) closed at $187.55, marking a -0.49% move from the previous day. This change lagged the S&P 500's 0.05% gain on the day. Elsewhere, the Dow gained 0.11%, while the tech-heavy Nasdaq added 0.11%.

Prior to today's trading, shares of the furniture and housewares company had gained 1.88% over the past month. This has outpaced the Retail-Wholesale sector's gain of 1.18% and lagged the S&P 500's gain of 4.32% in that time.

Investors will be hoping for strength from RH as it approaches 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%. Meanwhile, our latest consensus estimate is calling for revenue of $675.57 million, up 5.8% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $10.81 per share and revenue of $2.69 billion, which would represent changes of +26.58% and +6.98%, 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. RH is currently a Zacks Rank #2 (Buy).

Investors should also note RH's current valuation metrics, including its Forward P/E ratio of 17.44. This valuation marks a premium compared to its industry's average Forward P/E of 16.39.

Meanwhile, RH's PEG ratio is currently 1.4. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Retail - Home Furnishings stocks are, on average, holding a PEG ratio of 1.09 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 184, putting it in the bottom 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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