Back to top

Restoration Hardware Attains New High

Read MoreHide Full Article

Shares of Restoration Hardware Holdings, Inc. (RH - Free Report) continued to ascend and crafted a new 52-week high of $75.77 on Jun 28, 2013, before closing at $75.00. Share prices of this luxury home furnishings retailer have amassed a year-to-date return of roughly 126%.

Based on the current price, the company is 10.3% above the Zacks Consensus average analyst price target of $68.00. Restoration Hardware currently trades at a forward P/E of 50.82x, a substantial premium to the peer group average of 21.11x. Additionally, the company’s long-term estimated EPS growth rate is 23.8%, higher than the peer group average of 19.5%.

Restoration Hardware is one such company which has been firing on all cylinders. On studying its earnings surprise history, we see that the stock has outperformed the Zacks Consensus Estimate by an average of 43.3% in the trailing 3 quarters, including a positive surprise of 50% in the recently concluded quarter.

The company posted impressive first-quarter fiscal 2013 results on Jun 13. The quarterly earnings of 6 cents a share surpassed the Zacks Consensus Estimate by a couple of cents and improved significantly from the loss of 4 cents witnessed in the year-ago quarter.

Encouraged by the strong quarterly results, Restoration Hardware raised its fiscal-2013 guidance. The company now expects top-line improvement in the range of 23% to 27%, up from its earlier guidance range of 19% to 22%. Moreover, earnings are forecasted in the range of $1.41 to $1.47 per share, significantly rising from its previous guidance range of $1.29 to $1.37.

The current Zacks Consensus Estimate for fiscal 2013 is $1.48, which has moved up by 7.2% in the last 30 days.

We are encouraged by the company’s strong performance, despite the challenging macroeconomic environment. The company’s focus on strategic initiatives to drive growth and profitability in the luxury home furnishings market is quite encouraging.

Considering the pros of the stock, Restoration Hardware carries a favorable Zacks Rank #1 (Strong Buy).

Other Stocks to Consider

Besides Restoration Hardware, other stocks worth considering in the home furnishings & fixtures sector include Fortune Brands Home & Security, Inc. (FBHS - Free Report) and Haverty Furniture Companies Inc. (HVT - Free Report) both of which hold a Zacks Rank #1 (Strong Buy) and are expected to continue with their upbeat performance. Kirkland's Inc. (KIRK - Free Report) carrying a Zacks Rank #2 (Buy) is also worth considering.

More from Zacks Analyst Blog

You May Like