Restoration Hardware Holdings, Inc [NYSE: RH] has announced its Q1 results, and adjusted earnings stand at $1.85 on a revenue of $598.4 million. Analysts were expecting adjusted earnings per share of $1.53 on revenues of $584 million. The company has also adjusted its net earnings for the year to $9.27 per share on revenues of $2.6 billion, up from $8.76 per share. The company intends to keep growing its earnings by integrating its operating platform in order to sustain its profitability. By taking this approach, RH intends to grow its revenues and operating margins going into the future.
The company has also announced that it is taking measures to protect itself from the U.S-China trade war. While the company generates 40% of its revenues from China, it is taking steps to move some of its operations back to the U.S, through strategic partnerships. This is a significant move, one that helps it of smooth operations, no matter the course that the trade war takes.
The company’s earnings report, and its report on how it is handling the China trade war has excited the market in pre-market trading. At the time of writing, the company was up by 23% in pre-market, trading at $116.99. If it starts the day at this level, then it will have broken past yesterday’s high of $96.29 which is now a key resistance point. It’s a bullish signal that could see RH trade in the green on Thursday trading. This bullish sentiment is also quite evident on the monthly chart where RH is on a rebound. If it opens the day’s trading at $116, then it will have broken monthly resistance at $100 on the 50-day MA. The next key resistance could be at $119.38 on the monthly 100-day MA. If it breaches this level, and pushes past the 200-day MA at $122.51, then it would be confirmation of a bullish reversal. It’s an indicator that investors are optimistic with the results that this company has delivered and the projections that it has given for the financial year.
Besides these results, other aspects of the company paint a picture of strength. The company has a profit margin of 6.01%, and an operating margin of 12%. The company’s management is also very efficient in its operations. This is evident in its return on assets, which stands at 10.62%. It’s an indicator that the market is very receptive of this company’s products. This company also seems well capitalized to meet its expenses, as evident in its positive operating cash flows of $300.56 million.
Analysts also hold a positive view of this stock. One analyst Gordon Haskett recently upgraded this stock from reduce to hold. It’s an indicator of the fundamental strength of this company.