RH (RH), formerly known as Restoration Hardware, announced its 4Q17 earnings after the market closed on March 27, 2018. It posted adjusted EPS (earnings per share) of $1.69 on revenues of $670.3 million. Compared to 4Q16, EPS rose 148.5%, and revenues rose 13.6%.
Analysts were expecting RH to post EPS of $1.56 on revenues of $671.5 million. After posting its 4Q17 earnings, management raised the adjusted net income guidance for 2018. RH’s strong 4Q17 earnings, improvement in margins, and raising its net income guidance for 2018 appear to have increased investor confidence, leading to a rise in RH stock. As of March 28, 2018, RH was trading at $92.24, which represents a rise of 22.5% from its previous day’s closing price.
Last year, 2017, was a year of execution, architecture, and cash for RH since it moved away from a promotional model to a membership model in 2016. RH stock returned 180.8% in 2017. Since the beginning of 2018, the stock has risen 7%. Comparatively, Williams-Sonoma (WSM) and Bed Bath & Beyond (BBBY) have returned 0.3% and -6.3%, respectively, year-to-date. The SPDR S&P Homebuilders ETF (XHB) and the S&P 500 Index (SPY) have fallen 9.2% and 2.6%, respectively.
In this series, we’ll analyze RH’s 4Q17 performance by comparing it with analysts’ estimates. We’ll also look at management’s guidance and analysts’ estimates for the next four quarters. Finally, we’ll take a look at RH’s valuation multiple and analysts’ recommendations for the stock.
Let’s start by looking at RH’s 4Q17 revenue.