RH (NYSE:RH) Shocks and Shorts React

RH (NYSE:RH)

Heavily-shorted Restoration Hardware announced a $300 million buy-back, reported Q4 2016 earnings and beat expectations by $0.03 – $0.68 vs $0.65. Revenues were reported down 8.8% YoY but that figure also beat expectations by $6.68 million. For 2016, the company reported profit of $4.7 million, or $0.12/share. Revenue was reported at $2.13 billion. The results in the share price have been dramatic and possibly due to short covering – RH is up over 25% at the time of this writing and had been up over 30%.

Corte Madera, CA-based RH (NYSE:RH) offers furniture, lighting, textiles, bathware, decor, outdoor and garden, tableware, and child and teen furnishings. The company sells products through its stores and catalogs, as well as through its Websites, such as restorationhardware.com, rh.com, rhbabyandchild.com, rhteen.com, and rhmodern.com. As of October 29, 2016, it operated 85 retail galleries that include 51 legacy galleries, 6 larger format design galleries, 7 next generation design galleries, 1 RH modern gallery, and 5 RH baby & child galleries throughout the United States and Canada; 15 Waterworks showrooms in the United States and the United Kingdom; and 28 outlet stores.

In December, RH was trading in the $39 handle then provided guidance lower based on weak holiday sales. That precipitated a slide that ended in early February with RH shares trading in the $24 handle. For the previous month RH (NYSE:RH) is down over 10% and down over 28% for the quarter. However the earnings report today set off trading in volumes over eight times their daily average and shares are trading over 35% above their February lows.

RH (NYSE:RH) sales have steadily improved each year since 2012 when they reported $960 million. By 2016 that number improved to $2.11 Billion. EPS has also improved since 2013 when the company reported a loss of $0.40. In 2016 EPS was a profit of $2.27. Of the thirteen forms that follow RH (NYSE:RH), ten give the shares a rating of “Hold” but three rate the shares as a “Strong Buy”.

2/24/2017
Ticker Symbol RH
Last Price a/o 1:11 PM EST  $                    31.94
Average Volume                2,160,000
Market Cap (mlns)  $              1,040.00
Sales (mlns) $2,200.00
Shares Outstanding (mlns) 41.35
Share Float (mlns) 38.37
Shortable Yes
Optionable Yes
Inside Ownership 0.00%
Short Float 40.77%
Short Interest Ratio 7.24
Quarterly Return -28.05%
YTD Return -17.95%
Year Return -51.48%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.

 

Author: Steve Clark

Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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