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Zacks Industry Rank Analysis

Over the past week, we’ve seen continued strength in housing construction. But inside, design aesthetics can truly make a house feel like a home.  Responding accordingly, the Zacks Industry Ranking of retail furnishings has mounted an impressive 22-position gain in the last seven days.

Retail Furnishings now sits at a cozy #15 on the Zacks Industry Rank.

The eight companies in this sector have had 23 recent positive revisions to annual earnings estimates compared to only 4 negative.  At an average of +29%, there are solid indicators this trend is making itself at home.  A closer look at the industry reveals two retailers which are providing eye-catching solutions for more than just shoppers, but investors as well.

An important factor in this growth may be the desire of homeowners to reinvest in their living space.  Over the past several years, the slumping housing market has deterred many from spending money on interior upgrades.  A new sense of stability, and increases in property values, is bringing confidence that these home expenses can not only be enjoyed, but recaptured upon sale.

With only one exception, every company in the Zacks Industry Rank for retail furnishings has seen upward revision this week.  Standing out among them, each of the following businesses has been upgraded to #1 (Strong Buy). Upward movement in rank from a Buy to a Strong Buy signals that a stock may be on the move higher following future positive earnings estimate revisions. 

With this in mind, such indicators can provide insight to the informed investor about continued growth.  Both of these companies have been revised to a current Zacks Rank #1 (Strong Buy) this week and both hold a Zack’s Recommendation of Outperform.

We invite you inside to take a closer look at these two suppliers.  Who knows?  You may even find a rug that ties the room together.

Restoration Hardware Holdings, Inc. (RH - Snapshot Report)

RH is a Zacks Rank #1 (Strong Buy). It was raised within the last week from Zacks Rank #2 (Buy) and reports earnings on October 16, 2013.

Restoration Hardware Holdings, Inc. is a luxury brand in the home furnishings marketplace, offering product assortments across a number of categories, including furniture, lighting, textiles, bathware, decor, outdoor and garden, as well as baby and child products. The company's business is integrated across its multiple channels of distribution, consists of its stores, catalogs and websites.

RH is benefiting from the implementation of a new strategy, establishing itself in premium retail locations with even larger stores which can offer the diversity of products to meet the new wave of consumer demand.

Restoration Hardware’s most recent earnings surprise was 50%.

Fortune Brands Home & Security (FBHS - Snapshot Report)

FBHS is a Zacks Rank #1 (Strong Buy), climbing up from Zacks Rank #2 (Buy) just last week.  This company reports quarterly earnings on July 25, 2013.

Fortune Brands Home & Security, Inc provides home and security products in the United States. It manufactures custom, semi-custom, and stock cabinetry for the kitchen, bath, and other parts. The company is also engaged in manufacturing and selling fiberglass and steel entry door systems, vinyl-framed windows and patio doors. 

Notably, FBHS operates Moen brand faucets, which has seen strong growth as a do-it-yourself renovation for homeowners looking to add new value with upgraded kitchens and bathrooms.

FBHS had their most recent earnings surprise of 41.18% for Q1.

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