Back to top

Image: Bigstock

Why Restoration Hardware (RH) Stock Soared Despite Market Rout

Read MoreHide Full Article

Shares of Restoration Hardware (RH - Free Report) gained more than 9% on Tuesday, a trading session that saw broader indexes battered on renewed trade war fears and bearish yield curve trends. The home furnishings retailer managed to stick out from the pack thanks to its strong earnings result and guidance.

Restoration Hardware posted earnings of $1.73 per share, crushing the Zacks Consensus Estimate of $1.27 and improving 66% from the year-ago period. This performance also exceeded RH’s own guidance range of $1.15 to $1.33 per share.

Adjusted revenues for the quarter came in at $638.5 million, up 8% from the year-ago period. This also beat analysts’ expectations of $633 million. RH’s comparable brand revenues (comps) increased 4% on a year-over-year basis. This is especially interesting given that the comparable quarter saw comps growth of 6%.

“While the luxury housing market has sequentially slowed throughout 2018, our revenues have sequentially accelerated, despite cycling inventory reduction efforts and managing the business with a bias for earnings versus revenue growth, clearly demonstrating our ability to gain market share,” the company said in its release.

RH maintained its fiscal year 2019 revenue guidance. The company sees sales in the range of $2.72 billion to $2.82 billion, which would represent increases of 8% to 12%. RH raised its estimate for return on invested capital to more than 50% from 35%. Management said it will not see a material impact from Chinese tariffs.

RH shares opened at $145.45, up 17.6% from yesterday’s close. The stock reached an intraday high of $148.54 per share in early morning trading. The day’s volatility eventually took some steam out of its momentum, but RH still managed to close up 10.9% to $137.13 per share.

Meanwhile, it was a brutal day for broader indexes. Concerns about a flattening yield curve, slowing economic growth, and renewed trade uncertainties between the U.S. and China battered stocks. The S&P 500 lost more than 3.2%, while the dropped almost 3.1%.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


RH (RH) - free report >>

Published in