Why Restoration Hardware Shares Soared

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 home goods retailer Restoration Hardware (NYSE: RH  ) surged 18% today after its quarterly results and outlook topped Wall Street expectations.

So what: Today's first-quarter beat -- adjusted EPS of $0.06 on revenue of $301.3 million versus the consensus of $0.04 and $298.9 million -- and upbeat guidance, suggests that the company's turnaround initiatives continue to gain traction. In fact, same-store sales for the quarter soared 41% over the year-ago period, reinforcing optimism over management's ability to grow profitably going forward.

Now what: Management now sees full-year adjusted EPS of $1.41-$1.47 per share on revenue growth of 23%-27%, nicely above its prior view of $1.29-$1.37 and 19%-22%, respectively. "We are receiving overwhelming support and interest from the landlord community, with offers for leases with more favorable terms that are typically available only to anchor tenants in several of the most prestigious shopping centers in North America," said CEO Carlos Alberini. "We believe that over time, these new deals will enable us to deliver higher sales and increased earnings, reduce our capital investment, and achieve higher ROIC." With the stock now up a whopping 125% from its November IPO and trading at a forward P/E of 40, however, I'd wait for the exuberance to fade significantly before buying into that bullishness.

Interested in more info on Restoration Hardware? Add it to your watchlist.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2490912, ~/Articles/ArticleHandler.aspx, 10/30/2014 9:19:00 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement