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The Zacks Analyst Blog Highlights: Restoration Hardware Holdings, Tiffany, Signet Jewelers, Columbia Sportswear and Hanesbrands

Zacks Equity Research

For Immediate Release
Chicago, IL – July 01, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the upgraded Restoration Hardware Holdings, Inc. (RH-Free Report), Tiffany & Company (TIF-Free Report), Signet Jewelers Limited (SIG-Free Report), Columbia Sportswear Company (COLM-Free Report) and Hanesbrands Inc. (HBI-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday’s Analyst Blog:

Restoration Hardware Upped to Strong Buy

On Jun 28, 2014, Zacks Investment Research upgraded Restoration Hardware Holdings, Inc. (RH-Free Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Restoration Hardware has witnessed rising earnings estimates over the last 30 days following spectacular first quarter fiscal 2014 results. Moreover, this home furnishings retailer has delivered positive earnings surprises in the trailing four quarters with an average beat of 37.0%. The long-term expected earnings growth rate for this stock is 28.6%.   

The company’s earnings of 18 cents per share grew threefold year over year while comfortably beating the Zacks Consensus Estimate of 10 cents and exceeding the company’s own guidance of 9–11 cents a share. The bottom line was driven by a robust 22% surge in the company’s net revenues of $366.3 million. Net sales not only surpassed the Zacks Consensus Estimate of $346.0 million, but also came ahead of the company’s predicted range of $345–$350 million.

Further, management seems highly impressed with the company’s first-quarter performance despite eliminating the mailing of “Fall 2013” Source Book. The solid results coupled with its leading position in the home furnishings industry and multi-network business model make Restoration Hardware confident about its future prospects.

This was well reflected in the company’s encouraging outlook for fiscal 2014. It now expects net revenues to range from $1.86–$1.89 billion, compared with $1.825–$1.86 billion predicted earlier. Moreover, it anticipates adjusted earnings per share to lie in the band of $2.24–$2.30, up from $2.14–$2.22 per share forecasted previously.

The Zacks Consensus Estimate for fiscal 2014 and 2015 increased 7.7% and 2.5% to $2.38 and $2.85 per share, respectively.

Going forward, the company also plans to maintain its focus on transforming its retail outlets and expanding its product portfolio, with the latter taking a leading edge from its 2014 Source Books. In fiscal 2014, the company plans to introduce new Galleries in Greenwich, and Los Angeles.

The company believes that subsequent to its real estate transformation in North America, it will record annual sales of $4–$5 billion, generating operating margins in the mid-teens and producing adequate free cash flow.

On the trading front, shares of this retailer hit a 52-week high of $93.54 per share before closing a notch below at $92.37 per share on the last trading day.  Also, stock price has gained 37.2% on the index year to date.

Why Is Tiffany a Strong Buy?

Zacks Investment Research upgraded Tiffany & Company (TIF-Free Report) to a Zacks Rank #1 (Strong Buy) on Jun 28, 2014, following the company’s better-than-expected financial results for first-quarter fiscal 2014.

Why the Upgrade?

The Zacks Consensus Estimate has been showing an uptrend since the earnings announcement on May 21. The better-than-expected results triggered the northward movement as analysts became more constructive on the stock’s future performance. This designer, manufacturer and retailer of fine jewelry has outdone the Zacks Consensus Estimate in the trailing four quarters with an average beat of 15.2%. The long-term expected earnings growth rate for this stock is 13.6%.  

We observe that both the top and bottom lines came ahead of the Zacks Consensus Estimate. The quarterly earnings of 97 cents a share beat the Zacks Consensus Estimate of 77 cents and the prior-year quarter earnings of 70 cents. Results benefited from higher sales and improved operating margin. Net sales of $1,012.1 million grew 13% from the prior-year quarter, and surpassed the Zacks Consensus Estimate of $953 million.

We believe Tiffany is well positioned to support robust sales and witness earnings growth in the long run by leveraging capital investments made over the past several years in distribution, manufacturing and diamond sourcing processes. Moreover, with nearly half of the total sales generated internationally, we believe that the company is well diversified from a regional perspective as well.

Tiffany, which competes with Signet Jewelers Limited (SIG-Free Report), holds a significant position in the world jewelry market, and its long-term growth prospects remain encouraging given its product launches and focus on enhancing its geographic reach through its store expansion program.

Following a robust first quarter, Tiffany raised its earnings expectations. The company now projects fiscal 2014 earnings between $4.15 and $4.25 per share as against $4.05–$4.15 per share expected earlier. Management now projects total net sales growth in the high-single digit percentage for fiscal 2014 with growth expected across all regions.

Strong results and the upbeat guidance led to an uptrend in the Zacks Consensus Estimate, which increased 3.1% to $4.28 for fiscal 2014 and 2.3% to $4.85 for fiscal 2015 in the past 60 days.

Other Stocks to Consider

Other retail stocks that look promising include Columbia Sportswear Company (COLM-Free Report) and Hanesbrands Inc. (HBI-Free Report) holding a Zacks Rank #2 (Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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