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RH Declines 4.3% Post Q4 Results

Shares of RH (NYSE: RH) tanked 4.3% in Tuesday’s extended trade on mixed Q4 results reported by the company on account of supply chain issues. RH is a home-furnishings company that sells its products online and through retail stores.

Results in Detail

Revenues jumped 11% year-over-year to $902 million but lagged consensus estimates of $931.1 million. Adjusted earnings of $5.66 per share came above the analysts’ expectations of $5.57 per share. The company had reported earnings of $5.07 per share in the same quarter last year.

For the Fiscal Year 2021, the company reported adjusted net revenues of $3.76 billion, up 32% year-over-year. Also, RH’s adjusted earnings increased 46% to $26.12 million.

The company ended the year with $90 million in net debt and $2.2 billion of cash balance. As of January 29, 2022, RH had 67 total galleries, 38 outlets and 14 waterworks showrooms.

Outlook

RH projects Q1 net revenue to grow 7% to 8%. Adjusted operating margin is expected to be between 23% and 23.5%. For the Fiscal Year 2022, the company expects net revenue growth in the range of 5% to 7% and adjusted operating margin in the range of 25% to 26%.

Stock Split

Alongside earnings, RH announced plans to execute a 3-for-1 stock split of its common stock. The move comes on account of significant growth in the share price since its IPO in 2012. Shares have skyrocketed 741% in the past five years.

Stock Rating

Overall, the Street is bullish on the stock and has a Strong Buy consensus rating based on six Buys and one Hold. RH’s average price target of $660.86 implies upside potential of about 71.3% from current levels.

Hedge Fund Trading Activity

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in RH is currently Very Positive, as the cumulative change in holdings across all 14 hedge funds that were active in the last quarter was an increase of 672,600 shares.

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