Shares of RH (RH - Free Report) , formerly known as Restoration Hardware, gained 35.6% in after-hour trading on Sep 6, owing to stellar second-quarter performance and raised fiscal 2017 guidance.
Earnings & Revenues
The company reported second-quarter fiscal 2017 earnings per share of 65 cents, an improvement of 47.7% compared to the prior-year quarter. Also, earnings surpassed the Zacks Consensus Estimate by 38.3%.
Revenues increased 13.2% to $615.3 million, surpassing the Zacks Consensus Estimate of $612.7 million by 0.4%. Core RH Business, excluding outlet and Waterworks acquisition, increased 10% year over year.
RH’s comparable brand revenues increased 7% year over year, compared with the 3% decline in the prior-year quarter. The company’s direct revenues increased 14% and store revenues rose 13% from the prior year quarter.
Restoration Hardware Holdings Inc. Price, Consensus and EPS Surprise
Margins
Adjusted operating income in the reported quarter improved from the prior-year figure of $33.2 million to $39.9 million. Adjusted operating margin expanded 30 basis points (bps) to 6.4%. Adjusted gross profit came in at $210.9 million, up 15.1% year over year. Adjusted gross margin also improved 40 bps to 34.1%.
Store Update
As of July 2017, RH operated 85 retail galleries, slightly higher than 84 in the prior-year quarter. These included 50 legacy galleries, six large format galleries, eight next generation design galleries, one RH Modern Gallery and five Baby & Child galleries in the United States and Canada, and 15 Waterworks showrooms in the United States and U.K.
Balance Sheet
RH had cash and cash equivalents of $21.6 million as on Jul 29, 2017, compared with $87.0 million as on Jan 28, 2017. The company ended the quarter with merchandise inventories worth $608 million.
Third-Quarter Outlook
Revenues are projected in the $575 million to $590 million range.
Adjusted operating margins are expected in the 7% to 7.6% band.
Adjusted net income is projected in the range of $16 million to $19 million, leading to adjusted diluted earnings per share of 68 cents to 80 cents.
Fiscal 2017 Outlook
Revenues are expected in the $2.4 billion to $2.5 billion range.
The company expects adjusted net income in the $70 million to $77 million band (previously $60-$70 million) and adjusted diluted earnings per share of $2.43 to $2.67 (previously $1.67-$1.94).
RH expects to open three next generation Design Galleries this year.
Zacks Rank & Other Key Picks
RH carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the Retail-Wholesale sector include Bravo Brio Restaurant Group, Inc. , Domino's Pizza Inc. (DPZ - Free Report) and Papa John's International, Inc. (PZZA - Free Report) .
All the companies carry a Zacks Rank #2. Full-year 2017 earnings for Bravo Brio Restaurant are expected to increase 50%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Domino's is likely to witness 33.8% earnings growth in 2017.
Papa John's is expected to see 11.8% growth in 2017 earnings.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Shares of RH (RH - Free Report) , formerly known as Restoration Hardware, gained 35.6% in after-hour trading on Sep 6, owing to stellar second-quarter performance and raised fiscal 2017 guidance.
Earnings & Revenues
The company reported second-quarter fiscal 2017 earnings per share of 65 cents, an improvement of 47.7% compared to the prior-year quarter. Also, earnings surpassed the Zacks Consensus Estimate by 38.3%.
Revenues increased 13.2% to $615.3 million, surpassing the Zacks Consensus Estimate of $612.7 million by 0.4%. Core RH Business, excluding outlet and Waterworks acquisition, increased 10% year over year.
RH’s comparable brand revenues increased 7% year over year, compared with the 3% decline in the prior-year quarter. The company’s direct revenues increased 14% and store revenues rose 13% from the prior year quarter.
Restoration Hardware Holdings Inc. Price, Consensus and EPS Surprise
Margins
Adjusted operating income in the reported quarter improved from the prior-year figure of $33.2 million to $39.9 million. Adjusted operating margin expanded 30 basis points (bps) to 6.4%. Adjusted gross profit came in at $210.9 million, up 15.1% year over year. Adjusted gross margin also improved 40 bps to 34.1%.
Store Update
As of July 2017, RH operated 85 retail galleries, slightly higher than 84 in the prior-year quarter. These included 50 legacy galleries, six large format galleries, eight next generation design galleries, one RH Modern Gallery and five Baby & Child galleries in the United States and Canada, and 15 Waterworks showrooms in the United States and U.K.
Balance Sheet
RH had cash and cash equivalents of $21.6 million as on Jul 29, 2017, compared with $87.0 million as on Jan 28, 2017. The company ended the quarter with merchandise inventories worth $608 million.
Third-Quarter Outlook
Revenues are projected in the $575 million to $590 million range.
Adjusted operating margins are expected in the 7% to 7.6% band.
Adjusted net income is projected in the range of $16 million to $19 million, leading to adjusted diluted earnings per share of 68 cents to 80 cents.
Fiscal 2017 Outlook
Revenues are expected in the $2.4 billion to $2.5 billion range.
The company expects adjusted net income in the $70 million to $77 million band (previously $60-$70 million) and adjusted diluted earnings per share of $2.43 to $2.67 (previously $1.67-$1.94).
RH expects to open three next generation Design Galleries this year.
Zacks Rank & Other Key Picks
RH carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the Retail-Wholesale sector include Bravo Brio Restaurant Group, Inc. , Domino's Pizza Inc. (DPZ - Free Report) and Papa John's International, Inc. (PZZA - Free Report) .
All the companies carry a Zacks Rank #2. Full-year 2017 earnings for Bravo Brio Restaurant are expected to increase 50%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Domino's is likely to witness 33.8% earnings growth in 2017.
Papa John's is expected to see 11.8% growth in 2017 earnings.
One Simple Trading Idea
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today.
Learn more >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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