What Drove RH’s Stock Performance in H1 2018



RH’s stock rises 62.0%

RH (RH) stock rose 62.0% in the first half of the year and has returned 57.5% year-to-date. The company beat analysts’ EPS expectations during the first quarter, and the company has raised its EPS guidance for 2018, boosting investors’ confidence and its stock price.

During the quarter, RH’s revenue fell 0.8% YoY (year-over-year) to $557.4 million from $562.1 million, missing analysts’ expectation of $563.0 million. The company’s revenue fell due to SKU (stock-keeping unit) rationalization and last year’s incremental outlet sales. The company’s comparable brand revenue grew 1.0%.

However, RH’s EPS grew 2,560% YoY to $1.33, beating analysts’ expectation of $1.02. The EPS growth was driven by net margin expansion and share repurchases.

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In 2018, RH expects its revenue to grow 5%–7% YoY to $2.53 billion–$2.57 billion, and expects its EPS to grow 84.8%–99.1% YoY to $6.34–$6.83 from $3.43.

Analysts’ recommendations

Of the 22 analysts following RH, 31.8% recommend “buy,” 63.6% recommend “hold,” and 4.5% recommend “sell.” Their target price of $150.41 implies a 9.8% return over the next 12 months. Next, we’ll look at Williams-Sonoma’s stock performance.


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