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."
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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
-
I'm want to give my 3 grandkids $5K each for Christmas.You're comfortably retired and want to give your grandkids a big Christmas check, but their parents are worried they might spend it all. We ask the pros for help.
-
If You're Not Doing Roth Conversions, You Need to Read ThisRoth conversions and other Roth strategies can be complex, but don't dismiss these tax planning tools outright. They could really work for you and your heirs.
-
Could Traditional Retirement Expectations Be Killing Us?A retirement psychologist makes the case: A fulfilling retirement begins with a blueprint for living, rather than simply the accumulation of a large nest egg.
-
I'm a Financial Planner: If You're Not Doing Roth Conversions, You Need to Read This
Roth conversions and other Roth strategies can be complex, but don't dismiss these tax planning tools outright. They could really work for you and your heirs.
-
Could Traditional Retirement Expectations Be Killing Us? A Retirement Psychologist Makes the Case
A retirement psychologist makes the case: A fulfilling retirement begins with a blueprint for living, rather than simply the accumulation of a large nest egg.
-
I'm a Financial Adviser: This Is How You Can Adapt to Social Security UncertaintyRather than letting the unknowns make you anxious, focus on building a flexible income strategy that can adapt to possible future Social Security changes.
-
I'm a Financial Planner for Millionaires: Here's How to Give Your Kids Cash Gifts Without Triggering IRS PaperworkMost people can gift large sums without paying tax or filing a return, especially by structuring gifts across two tax years or splitting gifts with a spouse.
-
'Boomer Candy' Investments Might Seem Sweet, But They Can Have a Sour AftertasteProducts such as index annuities, structured notes and buffered ETFs might seem appealing, but sometimes they can rob you of flexibility and trap your capital.
-
AI Stocks Lead Nasdaq's 398-Point Nosedive: Stock Market TodayThe major stock market indexes do not yet reflect the bullish tendencies of sector rotation and broadening participation.
-
Got $100 to Gamble? These Penny Stocks Could Be Worth the RideVolatile penny stocks are high-risk plays with potentially high rewards. If you have $100 you can afford to lose, these three names are worth a look.
-
Quick Question: Are You Planning for a 20-Year Retirement or a 30-Year Retirement?You probably should be planning for a much longer retirement than you are. To avoid running out of retirement savings, you really need to make a plan.
