RH Is Up ~21% since Reporting Its Earnings: Is There More Upside?


Jun. 26 2019, Updated 9:48 p.m. ET

Stock performance

On June 24, RH (RH) was trading at $115.01, implying a rise of 21.2% since its announcement of its first-quarter earnings results on June 12. Despite the surge in its stock price, the company is still trading at a discount of 29.1% to its 52-week high of $162.10 and at a premium of 36.7% to its 52-week low of $84.11.

In the first quarter, RH posted adjusted EPS of $1.85 and beat analysts’ EPS expectation of $1.55 by 19.4%, while its revenue of $598.8 million outperformed analysts’ estimate of $584.02 million by 2.5%. After RH reported its first-quarter earnings, its management raised its revenue and EPS guidance for 2019.

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Despite increased tariffs and negative macroeconomic trends, RH’s management is optimistic that its momentum will continue in 2019. The company is hoping that the introduction of RH Beach House, the opening of new galleries, the expansion of its product offerings, its investment in interior design, and its launch of RH Ski House will fuel its growth. The company’s strong first-quarter performance and its management’s raising of its 2019 guidance appear to have led to an increase in its stock price.

Year-to-date performance

Despite the recent surge in its stock, RH is still down 4.0% YTD (year-to-date). Weak fourth-quarter earnings and the renewed trade war between the US and China have negatively affected the company’s stock price. In comparison, its peers Williams-Sonoma (WSM) and Bed Bath & Beyond (BBBY) have returned 22.2% and -0.6%, respectively. The SPDR S&P Homebuilders ETF (XHB), which has invested ~8.4% of its holdings in home furnishing and furniture companies, has returned 26.0%.


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