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In the last reported quarter, this leading luxury home furnishing retailer’s earnings surpassed the Zacks Consensus Estimate by 0.4%. The company beat earnings expectations in each of the last four quarters, with the average being 12.7%. The reported figure also increased 11.7% from the year-ago level. However, its net revenues missed expectations by 2.9% but grew 10.9% year over year.
Trend in Estimate Revisions
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has moved upward to $5.46 from $5.24 over the past 60 days. The estimated figure indicates an increase of 11.7% from $4.89 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $925.3 million, suggesting 7.5% growth from the year-ago reported figure of $860.8 million.
Strong demand buoyed by higher home improvement activities is expected to reflect on RH’s earnings and revenues for the fiscal first quarter. Also, higher residential activities are likely to drive accelerated furniture and furnishings demand.
The company has been working on various strategies to elevate and enhance the RH brand image. Also, it has been transforming the entire business into a digital platform via The World of RH — a portal presenting the company’s products, places, services and spaces. Its digital experience — including RH Interiors, Modern, Outdoor, Baby & Child plus Teen — has been significantly adding strength to the company as it generates strong online revenues, with Source Books driving traffic to Galleries and websites.
Meanwhile, RH has been working on cost-saving initiatives such as redesigning the supply chain, reducing inventory, improving product margins and so on. Management expects these initiatives to be reflected in fiscal third-quarter earnings and margin expansion. Also, greater pricing power is expected to have boosted gross margins, while SG&A expenses are likely to have remained under control as the company limited advertising due to supply chain constraints.
Although the economy has been rebounding from COVID-19 impacts, retailers are still grappling with the effects of the same. Disruption across the global supply chain owing to the pandemic is anticipated to have been a cause of concern. Also, rising raw material costs may have been a risk.
For fiscal first-quarter 2022, RH expects net revenue growth in the range of 7-8%, suggesting a sharp fall from 78% in the prior-year period. Adjusted operating margin is projected in the range of 23-23.5%, implying growth from 22.6% a year ago.
What the Zacks Model Unveils
Our proven model does not predict an earnings beat for RH this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Williams-Sonoma Inc. (WSM - Free Report) reported impressive earnings for first-quarter fiscal 2022 (ended May 1, 2022). The company’s earnings and revenues beat the Zacks Consensus Estimate and improved on a year-over-year basis, courtesy of strength across all brands along with accelerated e-commerce growth.
Defying supply chain woes, material and labor shortages, and capacity limitations, WSM’s quarterly revenues improved from the year-ago period on strong demand.
Builders FirstSource (BLDR - Free Report) reported solid first-quarter 2022 results, wherein it reported core organic sales growth of 15%.
BLDR’s earnings and net sales surpassed the Zacks Consensus Estimate and increased significantly year over year. The results were driven by an increase in net sales and gross margin amid continuous raw material supply woes.
Beacon Roofing Supply, Inc. (BECN - Free Report) reported results for the first quarter of 2022. Earnings and revenues handily surpassed their respective Zacks Consensus Estimate and improved significantly on a year-over-year basis.
BECN’s solid results were mainly backed by strong net sales, gross margin expansion and operational improvement.
Image: Bigstock
RH Queued for Q1 Earnings: Key Factors to Take Into Account
RH (RH - Free Report) is scheduled to report first-quarter fiscal 2022 (ended Apr 30, 2022) results on Jun 2, after market close.
In the last reported quarter, this leading luxury home furnishing retailer’s earnings surpassed the Zacks Consensus Estimate by 0.4%. The company beat earnings expectations in each of the last four quarters, with the average being 12.7%. The reported figure also increased 11.7% from the year-ago level. However, its net revenues missed expectations by 2.9% but grew 10.9% year over year.
Trend in Estimate Revisions
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has moved upward to $5.46 from $5.24 over the past 60 days. The estimated figure indicates an increase of 11.7% from $4.89 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $925.3 million, suggesting 7.5% growth from the year-ago reported figure of $860.8 million.
RH Price and EPS Surprise
RH price-eps-surprise | RH Quote
Factors to Note
Strong demand buoyed by higher home improvement activities is expected to reflect on RH’s earnings and revenues for the fiscal first quarter. Also, higher residential activities are likely to drive accelerated furniture and furnishings demand.
The company has been working on various strategies to elevate and enhance the RH brand image. Also, it has been transforming the entire business into a digital platform via The World of RH — a portal presenting the company’s products, places, services and spaces. Its digital experience — including RH Interiors, Modern, Outdoor, Baby & Child plus Teen — has been significantly adding strength to the company as it generates strong online revenues, with Source Books driving traffic to Galleries and websites.
Meanwhile, RH has been working on cost-saving initiatives such as redesigning the supply chain, reducing inventory, improving product margins and so on. Management expects these initiatives to be reflected in fiscal third-quarter earnings and margin expansion. Also, greater pricing power is expected to have boosted gross margins, while SG&A expenses are likely to have remained under control as the company limited advertising due to supply chain constraints.
Although the economy has been rebounding from COVID-19 impacts, retailers are still grappling with the effects of the same. Disruption across the global supply chain owing to the pandemic is anticipated to have been a cause of concern. Also, rising raw material costs may have been a risk.
For fiscal first-quarter 2022, RH expects net revenue growth in the range of 7-8%, suggesting a sharp fall from 78% in the prior-year period. Adjusted operating margin is projected in the range of 23-23.5%, implying growth from 22.6% a year ago.
What the Zacks Model Unveils
Our proven model does not predict an earnings beat for RH this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: RH currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Peer Releases
Williams-Sonoma Inc. (WSM - Free Report) reported impressive earnings for first-quarter fiscal 2022 (ended May 1, 2022). The company’s earnings and revenues beat the Zacks Consensus Estimate and improved on a year-over-year basis, courtesy of strength across all brands along with accelerated e-commerce growth.
Defying supply chain woes, material and labor shortages, and capacity limitations, WSM’s quarterly revenues improved from the year-ago period on strong demand.
Builders FirstSource (BLDR - Free Report) reported solid first-quarter 2022 results, wherein it reported core organic sales growth of 15%.
BLDR’s earnings and net sales surpassed the Zacks Consensus Estimate and increased significantly year over year. The results were driven by an increase in net sales and gross margin amid continuous raw material supply woes.
Beacon Roofing Supply, Inc. (BECN - Free Report) reported results for the first quarter of 2022. Earnings and revenues handily surpassed their respective Zacks Consensus Estimate and improved significantly on a year-over-year basis.
BECN’s solid results were mainly backed by strong net sales, gross margin expansion and operational improvement.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.