RH (RH) stock is one of the biggest gainers on Wall Street Friday after the home furnishings retailer reported mixed results for its fiscal third quarter and raised its fourth-quarter and full-year outlook.
In the three months ending November 2, RH's revenue increased 8.1% year over year to $811.7 million. It also swung to a profit of $2.48 per share from a loss of 42 cents in the year-ago period.
"The positive inflection of our business continued to gain momentum with third-quarter demand increasing 13% despite operating in the worst housing market in 30 years," wrote RH CEO Gary Friedman in the company's shareholder letter. "Our vector is increasing in both magnitude and direction with November demand up 18%, as the most prolific product transformation and platform expansion in the history of our industry continues to unfold."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results came up short of analysts' expectations. Wall Street was anticipating revenue of $812.2 million and earnings of $2.65 per share, according to MarketWatch.
As a result of "current trends," RH raised its fourth-quarter and full-year guidance. The company now anticipates fourth-quarter revenue growth in the range of 18% to 20% and full-year revenue growth between 6.8% to 7.2%. It had previously forecast revenue growth of 5% to 7% in fiscal 2024.
"We have worked hard to destroy the former version of ourselves and are in the process of unleashing what we believe is an exponentially more inspiring and disruptive RH brand, inclusive of the most prolific product transformation and platform expansion in the history of our industry," Friedman said.
Is RH stock a buy, sell or hold?
RH shares had a slow start to 2024 but started picking up steam mid-summer. The retail stock is now up more than 49% for the year to date. And Wall Street is bullish on the former member of the Berkshire Hathaway equity portfolio.
According to S&P Global Market Intelligence, the consensus recommendation among analysts it tracks is a Buy.
However, analysts' price targets have failed to keep up with the recent surge in RH's share price. Indeed, analysts' average price target of $400.64 represents a notable discount to current trading levels. This could prompt price-target hikes following the consumer discretionary stock's post-earnings pop.
Financial services firm Wedbush is one of those that raised its target price on RH after earnings, to $500 from $430, while also maintaining its Outperform rating (equivalent to a Buy).
Wedbush analyst Seth Basham believes the upwardly revised price target, which is based on his expectation that RH should trade at 25 times Jefferies' fiscal 2026 earnings-per-share estimate of $20.04, is appropriate "given the sharply accelerating growth trends, the visible medium-term growth drivers, and the long-term potential."
Related Content
-
Ten Cheapest Places to Live in TexasProperty Tax Looking for a cheap place to live in Texas? Look no further. These counties have the lowest property tax bills in the Lone Star State.
-
AI Is Missing the Wisdom of Older Adults: What It Means for YouAI will increasingly affect your healthcare and finances, but young workers are primarily designing the systems and getting most of the jobs.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build WealthConsistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key PiecesIf retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or RelocateHomeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and FriendsWhat starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
Stock Market Today: Good Feelings and Solid Data Lift StocksResilience and de-escalation defined another generally positive day for financial markets.
-
What the HECM? Combine It With a QLAC and See What HappensCombining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
-
721 UPREIT DSTs: Real Estate Investing Expert Explores the Hidden RisksPotential investors need to understand the crucial distinction between a REIT's option to buy a Delaware statutory trust's property and its obligation.
