RH ( RH Quick Quote RH - Free Report) , formerly known as Restoration Hardware, gained 35.6% in after-hour trading on Sep 6, owing to stellar second-quarter performance and raised fiscal 2017 guidance. Earnings & Revenues The company reported second-quarter fiscal 2017 earnings per share of 65 cents, an improvement of 47.7% compared to the prior-year quarter. Also, earnings surpassed the Zacks Consensus Estimate by 38.3%. Revenues increased 13.2% to $615.3 million, surpassing the Zacks Consensus Estimate of $612.7 million by 0.4%. Core RH Business, excluding outlet and Waterworks acquisition, increased 10% year over year. RH’s comparable brand revenues increased 7% year over year, compared with the 3% decline in the prior-year quarter. The company’s direct revenues increased 14% and store revenues rose 13% from the prior year quarter. Restoration Hardware Holdings Inc. Price, Consensus and EPS Surprise
Margins Adjusted operating income in the reported quarter improved from the prior-year figure of $33.2 million to $39.9 million. Adjusted operating margin expanded 30 basis points (bps) to 6.4%. Adjusted gross profit came in at $210.9 million, up 15.1% year over year. Adjusted gross margin also improved 40 bps to 34.1%. Store Update As of July 2017, RH operated 85 retail galleries, slightly higher than 84 in the prior-year quarter. These included 50 legacy galleries, six large format galleries, eight next generation design galleries, one RH Modern Gallery and five Baby & Child galleries in the United States and Canada, and 15 Waterworks showrooms in the United States and U.K. Balance Sheet RH had cash and cash equivalents of $21.6 million as on Jul 29, 2017, compared with $87.0 million as on Jan 28, 2017. The company ended the quarter with merchandise inventories worth $608 million. Third-Quarter Outlook Revenues are projected in the $575 million to $590 million range. Adjusted operating margins are expected in the 7% to 7.6% band. Adjusted net income is projected in the range of $16 million to $19 million, leading to adjusted diluted earnings per share of 68 cents to 80 cents. Fiscal 2017 Outlook Revenues are expected in the $2.4 billion to $2.5 billion range. The company expects adjusted net income in the $70 million to $77 million band (previously $60-$70 million) and adjusted diluted earnings per share of $2.43 to $2.67 (previously $1.67-$1.94). RH expects to open three next generation Design Galleries this year. Zacks Rank & Other Key Picks RH carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the Retail-Wholesale sector include Bravo Brio Restaurant Group, Inc. , Domino's Pizza Inc. ( DPZ Quick Quote DPZ - Free Report) and Papa John's International, Inc. ( PZZA Quick Quote PZZA - Free Report) . All the companies carry a Zacks Rank #2. Full-year 2017 earnings for Bravo Brio Restaurant are expected to increase 50%. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Domino's is likely to witness 33.8% earnings growth in 2017.
Papa John's is expected to see 11.8% growth in 2017 earnings. One Simple Trading Idea Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars. This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today. Learn more >>