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Why Restoration Hardware Shares Jumped

By Jeremy Bowman - Updated Nov 17, 2016 at 4:25PM

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Is this meaningful? Or just another movement?

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 (RH 4.01%) 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.

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