Richelieu Hardware (TSE: RCH) recently reported earnings for its second quarter of Fiscal Year 2022. Earnings per share came in at C$0.83, which was above analysts’ consensus estimate of C$0.76. In the past nine quarters, the company has beat estimates eight times.
In addition, sales increased 31.4% year-over-year, with revenue hitting C$487.9 million compared to C$371.4 million. The revenue increase was driven by organic growth of 16.1% and acquisition growth of 15.3%.
However, EBITDA increased less than revenue, which means that the company wasn’t able to achieve operating leverage. Indeed, RCH’s EBITDA margin contracted from 16.4% to 16%. Therefore, net income also grew slower than revenue versus the comparable period, as it increased 25.5%.
Insiders Have Been Actively Buying
When looking at insider activity, there seems to be a lot of buying. In fact, insiders have purchased C$386,900 worth of shares in the past three months. As a result, confidence from within appears to be very high, as the Insider Confidence Signal for RCH stock is positive and is above the sector average, as shown in the picture below:
What Do Analysts Think of Richelieu Hardware?
Richelieu has a Moderate Buy consensus rating based on two Buys and one Hold assigned in the past three months. The average Richelieu Hardware price target of C$48.50 implies 29% upside potential.
Final Thoughts – A Strong Quarter
Richelieu saw a strong quarter, as the company grew its revenue rapidly while earnings came in better than expected. Because of this, both analysts and insiders appear optimistic about the company’s future.
