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Restoration Hardware (RH) Outpaces Stock Market Gains: What You Should Know

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In the latest trading session, Restoration Hardware (RH - Free Report) closed at $179.30, marking a +1.41% move from the previous day. This change outpaced the S&P 500's 1.09% gain on the day. At the same time, the Dow added 1.21%, and the tech-heavy Nasdaq gained 1.34%.

Coming into today, shares of the furniture and housewares company had gained 4.55% in the past month. In that same time, the Retail-Wholesale sector lost 3.08%, while the S&P 500 lost 1.17%.

Wall Street will be looking for positivity from RH as it approaches its next earnings report date. In that report, analysts expect RH to post earnings of $2.21 per share. This would mark year-over-year growth of 27.75%. Meanwhile, our latest consensus estimate is calling for revenue of $675.57 million, up 5.8% from the prior-year quarter.

RH's full-year Zacks Consensus Estimates are calling for earnings of $10.81 per share and revenue of $2.69 billion. These results would represent year-over-year changes of +26.58% and +6.98%, respectively.

Any recent changes to analyst estimates for RH should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable 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. The Zacks Consensus EPS estimate has moved 2.38% higher within the past month. RH is currently a Zacks Rank #1 (Strong Buy).

Digging into valuation, RH currently has a Forward P/E ratio of 16.36. This represents a premium compared to its industry's average Forward P/E of 15.54.

Meanwhile, RH's PEG ratio is currently 1.31. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Retail - Home Furnishings was holding an average PEG ratio of 1.31 at yesterday's closing price.

The Retail - Home Furnishings industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 54, putting it in the top 22% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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