RH Stock Surges Thanks to Optimistic Outlook



Q1 performance

RH (RH), formerly known as Restoration Hardware, posted its first-quarter earnings after the market closed on June 11. The company’s adjusted EPS rose 2,560% YoY (year-over-year) to $1.33, while its revenue fell 0.8% YoY to $557.4 million.

Stock performance

Analysts expected RH to post EPS of $1.02 and revenue of $563 million. After its strong first-quarter results were released, the company raised its EPS guidance for 2018 to $6.34–$6.83 from $5.45–$6.20. Its EPS guidance now exceeds analysts’ estimate of $5.91. The company’s strong first-quarter earnings and guidance appear to have increased investors’ confidence, boosting the company’s stock price. RH was trading 21.6% higher in the pre-market trading session on June 12.

Year-to-date performance

RH stock rose 180.8% in 2017 and has risen 37.7% year-to-date. In comparison, peers Williams-Sonoma (WSM) and Bed Bath & Beyond (BBBY) have returned 18.1% and -7.5% this year, respectively, while the broader comparative S&P 500 (SPX) and the SPDR S&P Homebuilders ETF (XHB) have returned 4.2% and -6.5%.

Series overview

In this series, we’ll compare RH’s first-quarter performance with analysts’ estimates, and look at management’s guidance for 2018. Let’s start by looking at RH’s first-quarter revenue.

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