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RH Beats Analysts’ EPS Expectations in Q1

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Q1 performance

In the first quarter, RH (RH) posted EPS of $1.11. Excluding one-time items, the company’s EPS rose 2,560% YoY (year-over-year) to $1.33 from $0.05.

The EPS growth was driven by net margin expansion and share repurchases over the last four quarters. The company has repurchased 12.4 million shares for $700 million in the last four quarters. Share repurchases lower companies’ number of shares outstanding, driving EPS.

As shown in the above graph, RH has beaten analysts’ EPS estimates three times in the last five quarters. When a company beats estimates, its stock price tends to rise.

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Peer comparison

During the same period, Williams-Sonoma’s (WSM) EPS grew 31.4% YoY. Analysts expect Bed Bath & Beyond’s (BBBY) to fall 46.3% YoY.

Outlook

Following its strong first quarter, RH raised its EPS guidance for 2018 to $6.34–$6.83 from $5.45–$6.20. The new forecast represents 85%–99% YoY growth. In the second quarter, RH expects adjusted EPS of $1.70–$1.77, which represents 161%–172% YoY growth from $0.65.

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