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RH (RH) Stock Sinks As Market Gains: Here's Why

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RH (RH - Free Report) closed the most recent trading day at $235.10, moving -4.31% from the previous trading session. This change lagged the S&P 500's daily gain of 0.03%. At the same time, the Dow lost 0.03%, and the tech-heavy Nasdaq lost 0.01%.

Shares of the furniture and housewares company witnessed a gain of 30.46% over the previous month, beating the performance of the Consumer Staples sector with its gain of 0.4%, and the S&P 500's gain of 3.46%.

Analysts and investors alike will be keeping a close eye on the performance of RH in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $3.18, marking a 88.17% rise compared to the same quarter of the previous year. Meanwhile, our latest consensus estimate is calling for revenue of $907.28 million, up 9.36% from the prior-year quarter.

For the full year, the Zacks Consensus Estimates project earnings of $10.76 per share and a revenue of $3.53 billion, demonstrating changes of +99.63% and +11.01%, respectively, from the preceding year.

It is also important to note the recent changes to analyst estimates for RH. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.01% upward. RH is currently a Zacks Rank #4 (Sell).

Looking at valuation, RH is presently trading at a Forward P/E ratio of 22.84. This expresses a premium compared to the average Forward P/E of 22.54 of its industry.

We can also see that RH currently has a PEG ratio of 0.69. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. Consumer Products - Staples stocks are, on average, holding a PEG ratio of 3.48 based on yesterday's closing prices.

The Consumer Products - Staples industry is part of the Consumer Staples sector. This industry, currently bearing a Zacks Industry Rank of 186, finds itself in the bottom 25% echelons of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.


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