Will RH’s 2Q17 Earnings Boost Its Stock Price?

Luxury home furnishings retailer RH (RH), formerly known as “Restoration Hardware,” is scheduled to announce its 2Q17 earnings after the market closes on September 6, 2017.

In 1Q17, RH posted an adjusted EPS (earnings per share) of $0.05 on revenues of $562.1 million. Analysts expected the company to post EPS of $0.05 on revenues of $556 million. Despite meeting analysts’ EPS estimate in 1Q17, the company’s stock price fell due to its weak outlook. After posting its 1Q17 earnings, RH set its 2Q17 EPS guidance at $0.38–$0.43, which was much lower than analysts’ expectation of $0.53–$0.75. As of September 1, 2017, RH was trading at $48.51, which represents a fall of 15.3% since the announcement of its 1Q17 earnings on June 1, 2017.

Despite the recent fall in its stock price, the company has returned 58.0% since the beginning of 2017. During the same period, Williams-Sonoma (WSM) and Bed Bath & Beyond’s (BBBY) stock price fell 3.9% and 31.5%, respectively. In 2016, RH moved from a promotional model company to a membership model company. The transformation caused its earnings to fall, which caused the company’s stock price to fall 61.4%.

Notably, the SPDR Dow Jones Industrial Average ETF (DIA) and the S&P 500 Index (SPX) have returned 11.3% and 10.6%, respectively. DIA has invested 43% of its holdings in home improvement companies.

With RH’s 2Q17 earnings around the corner, we’ll look at analysts’ revenue and EPS estimates. We’ll also cover management’s 2017 guidance and analysts’ estimates for the next four quarters. Finally, we’ll discuss analysts’ recommendations.

First, let’s start by looking at analysts’ revenue expectations.