Shares of RH (RH) surged 20% in after-hours trading after the high-end home furnishings company reported earnings for its second quarter of Fiscal Year 2024. Earnings per share came in at $1.69, which beat analysts’ consensus estimate of $1.57 per share.
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Sales increased by 3.7% year-over-year, with revenue hitting $829.66 million. This beat analysts’ expectations by $5 million. Interestingly, investors could have anticipated the year-over-year growth by simply looking at RH’s website traffic. As the image below shows, the number of visitors rose significantly during the most recent quarter. In fact, total estimated visits jumped 24.93% when compared to the same quarter of last year.
Guidance for Q3 2024
Looking forward, management has provided the following guidance for Q3 2024:
- Revenue to grow between 7% and 9% versus analysts’ estimates of 1.4%.
- Adjusted EBITDA margin of 21% to 22%
- Non-GAAP operating margin of 15% to 16%
As we can see, the company’s outlook is better than expected, which likely led to the after-hours move in the stock price.
Is RH Stock a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on RH stock based on five Buys, eight Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 20% decline in its share price over the past year, the average RH price target of $288 per share implies 14.85% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
