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Restoration Hardware (RH) Moves 15.7% Higher: Will This Strength Last?

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Restoration Hardware (RH - Free Report) shares ended the last trading session 15.7% higher at $707.14. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 2.2% loss over the past four weeks.

Shares of RH got a boost from stellar results for first-quarter fiscal 2021 (ended May 1, 2021) on the back of solid total company demand (up 101% year over year). Both adjusted earnings and revenues handily beat the Zacks Consensus Estimate. Notably, all key metrics grew significantly on a year-over-year basis.  RH witnessed a 109% increase in RH core demand in the quarter, which marked the strongest demand trends in the industry.

This furniture and housewares company is expected to post quarterly earnings of $5.79 per share in its upcoming report, which represents a year-over-year change of +18.2%. Revenues are expected to be $894.01 million, up 26% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Restoration Hardware, the consensus EPS estimate for the quarter has been revised marginally lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on RH going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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