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
-
Stock Market Today: Dow Rises 854 Points From Its Intraday LowIf there's one thing markets hate, it's uncertainty. But uncertainty is all they're getting these days.
-
Are You a Retirement Millionaire Too Scared To Spend?If you are too scared to spend money in retirement, you may be saddled with regret. Here are three ways to safely enjoy your sizable retirement nest egg.
-
Stock Market Today: Dow Rises 854 Points From Its Intraday LowIf there's one thing markets hate, it's uncertainty. But uncertainty is all they're getting these days.
-
Seven Questions to Ask When Evaluating Personal Loan OptionsTaking out a personal loan too hastily could lock you into unfavorable terms with an untrustworthy lender. Ask these questions before signing anything.
-
How Much Does Being Rich Matter in Retirement?After a certain point, having more money in retirement won't make you any happier, new research shows. Instead, physical health, a sense of purpose, and a minimal amount of non-mortgage debt are more relevant.
-
The Three Biggest Fears Keeping Retirees Up at NightHere are the steps you can take to put those fears to rest and retire with confidence so you can relax and enjoy the life you've planned.
-
What Can a Donor-Advised Fund Do for You? (A Lot)DAFs and private foundations go about helping charities (and those who donate) in different ways. Each comes with its own benefits and restrictions to navigate.
-
Estate Planning When You Have International AssetsEstate planning gets tricky when you have assets and/or beneficiaries outside the U.S. To avoid costly inheritance mistakes, it pays to understand the basics.
-
Microsoft Stock: Innovation Spurs Its 100,000% ReturnMicrosoft's ability to recognize the "next big thing" has allowed sales – and its share price – to grow exponentially over the years.
-
Three Essential Estate Planning Steps to Protect Your Nest EggAfter dedicating years to building your wealth and securing your future, make sure your assets are protected and your loved ones are provided for in the future.
