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In the last reported quarter, this leading luxury home furnishings retailer’s earnings and revenues surpassed the Zacks Consensus Estimate by 20.1% and 3.6%, respectively. The company beat earnings expectations in each of the last four quarters with the average being 20.4%.
The reported figures, however, decreased 19.3% and 13.7% from the year-ago level, respectively.
Trend in Estimate Revisions
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share moved upward to $3.35 from $3.33 over the last 30 days. The estimated figure indicates a decrease of 40.8% from $5.66 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $777.36 million, suggesting a 13.8% decline from the year-ago reported figure of $901.54 million.
RH’s home furnishing business activities have been adversely affected by soft housing trends, thanks to higher mortgage rates. A weakening macroeconomic environment, comprising rising interest rates and softness in luxury housing markets, is expected to have impacted results in the quarter to be reported. Also, supply-chain headwinds are creating short-term and long-term delays. Incremental distribution center-related expenses as well as higher product and freight costs may have dented profitability.
RH expects above mentioned headwinds to persist over the next few quarters. This apart, RH has been witnessing fixed occupancy deleverage over the past several quarters and this is expected to have weighed on fourth-quarter fiscal 2022 results as well.
Nonetheless, the company has been working on various strategies to elevate and enhance the RH brand image, which is expected to impact the to-be-reported quarter. Also, transformation of the entire business into a digital platform via The World of RH — a portal presenting the company’s products, places, services and spaces — is commendable.
RH has been working on cost-saving initiatives such as redesigning the supply chain, reducing inventory, improving product margins and so on. Also, greater pricing power is expected to have aided gross margins to some extent, while SG&A expenses are likely to have remained under control as the company limited advertising due to supply-chain constraints.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for RH this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: The company has an Earnings ESP of +8.95%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Builders FirstSource, Inc.’s (BLDR - Free Report) fourth-quarter 2022 earnings surpassed the Zacks Consensus Estimate and increased strongly year over year. Net sales surpassed the consensus mark but declined year over year.
BLDR’s results were hampered by declining single-family starts, two fewer selling days and commodity deflation, partially offset by growth from acquisitions.
Beacon Roofing Supply, Inc. (BECN - Free Report) reported lower-than-expected results for fourth-quarter 2022. Earnings and revenues missed the Zacks Consensus Estimate after beating it in the preceding four quarters. Revenues increased, but earnings declined on a year-over-year basis.
In the first quarter of 2023, BECN expects net sales to increase 5% on a year-over-year basis. The gross margin is expected to be 25.5%.
Williams-Sonoma Inc. (WSM - Free Report) reported impressive earnings for fourth-quarter fiscal 2022 (ended Jan 29, 2023). The bottom line surpassed the Zacks Consensus Estimate and grew on a year-over-year basis.
Yet, WSM’s revenues declined and missed analysts’ expectations due to weak demand in November and January.
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RH Lined Up for Q4 Earnings: Key Factors to Take Into Account
RH (RH - Free Report) is scheduled to report fourth-quarter fiscal 2022 (ended Jan 28, 2023) results on Mar 29, after market close.
In the last reported quarter, this leading luxury home furnishings retailer’s earnings and revenues surpassed the Zacks Consensus Estimate by 20.1% and 3.6%, respectively. The company beat earnings expectations in each of the last four quarters with the average being 20.4%.
The reported figures, however, decreased 19.3% and 13.7% from the year-ago level, respectively.
Trend in Estimate Revisions
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share moved upward to $3.35 from $3.33 over the last 30 days. The estimated figure indicates a decrease of 40.8% from $5.66 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $777.36 million, suggesting a 13.8% decline from the year-ago reported figure of $901.54 million.
RH Price and EPS Surprise
RH price-eps-surprise | RH Quote
Factors to Note
RH’s home furnishing business activities have been adversely affected by soft housing trends, thanks to higher mortgage rates. A weakening macroeconomic environment, comprising rising interest rates and softness in luxury housing markets, is expected to have impacted results in the quarter to be reported. Also, supply-chain headwinds are creating short-term and long-term delays. Incremental distribution center-related expenses as well as higher product and freight costs may have dented profitability.
RH expects above mentioned headwinds to persist over the next few quarters. This apart, RH has been witnessing fixed occupancy deleverage over the past several quarters and this is expected to have weighed on fourth-quarter fiscal 2022 results as well.
Nonetheless, the company has been working on various strategies to elevate and enhance the RH brand image, which is expected to impact the to-be-reported quarter. Also, transformation of the entire business into a digital platform via The World of RH — a portal presenting the company’s products, places, services and spaces — is commendable.
RH has been working on cost-saving initiatives such as redesigning the supply chain, reducing inventory, improving product margins and so on. Also, greater pricing power is expected to have aided gross margins to some extent, while SG&A expenses are likely to have remained under control as the company limited advertising due to supply-chain constraints.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for RH this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: The company has an Earnings ESP of +8.95%. 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
Builders FirstSource, Inc.’s (BLDR - Free Report) fourth-quarter 2022 earnings surpassed the Zacks Consensus Estimate and increased strongly year over year. Net sales surpassed the consensus mark but declined year over year.
BLDR’s results were hampered by declining single-family starts, two fewer selling days and commodity deflation, partially offset by growth from acquisitions.
Beacon Roofing Supply, Inc. (BECN - Free Report) reported lower-than-expected results for fourth-quarter 2022. Earnings and revenues missed the Zacks Consensus Estimate after beating it in the preceding four quarters. Revenues increased, but earnings declined on a year-over-year basis.
In the first quarter of 2023, BECN expects net sales to increase 5% on a year-over-year basis. The gross margin is expected to be 25.5%.
Williams-Sonoma Inc. (WSM - Free Report) reported impressive earnings for fourth-quarter fiscal 2022 (ended Jan 29, 2023). The bottom line surpassed the Zacks Consensus Estimate and grew on a year-over-year basis.
Yet, WSM’s revenues declined and missed analysts’ expectations due to weak demand in November and January.