Why Restoration Hardware Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Restoration Hardware (NYSE: RH  ) were stacking higher today after the company posted better-than-expected results in its quarterly report.

So what: The newly public home-furnishings retailer reported an adjusted earnings per share of $0.64, $0.02 better than analyst expectations. Revenue gained 30%, to $398.1 million, topping analyst expectations of $390.5 million, as well. Even better, same-store sales jumped by a whopping 26%. Since that metric excludes revenue from new stores, it's often the best indicator for a retailer's strength and future growth potential. In the current quarter, Restoration Hardware expects earnings per share between -$0.02 and break even, and revenue of $280-$285 million, both better than the Wall Street consenus. For the year, it sees an EPS of $1.29-$1.37.

Now what: It's hard to argue with 26% comparable sales growth, and considering the company is only guiding toward 20% revenue growth this year, we could see an easy earnings beat. The upscale furnishings seller may also be the right play at a time when the economy is recovering, and the housing market is starting to come back. Look for shares to go higher from here.

Don't miss the next update on Restoration Hardware. Add the company to your Watchlist by clicking right here.


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