Restoration Underway?

After the market closes on Wednesday June 8th we will get an idea whether Restoration Hardware is in the early stages of stock price restoration, or setting up for a plunge to record lows.  This is a report I plan to trade this week.  Why?

For one I think the stock is going to make a move greater than what the market is expecting which is $2.60 or almost 8%.



I am biased for a move to the upside and will  hedge a CALL position with some puts.  I am not trading for the stock to trade less than 8% in either direction after its earnings report.

Here is the type of trade I am looking to make:

$35 Calls 5 contracts for $1 cost $500

Hedge 5 $30 put contracts at $.30  cost $150

a 12% move to the upside would turn the $500 calls into $1,500+ , and the $150 put hedge into zero.

a 12%+ move lower would see the Call value head to nil and the puts double to $300, which would help offset some of the losing call position.

I will need $RH to at least trade over $36 to turn a profit.  The higher it goes the more profit the trade returns.

From $30 to $36 is no mans land for this trade.

Restoration Hardware Holdings Inc. is expected* to report earnings on 06/08/2016 after market close. The report will be for the fiscal Quarter ending Apr 2016. According to Zacks Investment Research, based on 11 analysts' forecasts, the consensus EPS forecast for the quarter is $0.05. The reported EPS for the same quarter last year was $0.23.

Analyst Opinion:

  • May 10th
    Restoration Hardware initiated with a Buy at Longbow
    Target $55.
  • April 13th
    Restoration Hardware initiated with a Perform at Oppenheimer
    Oppenheimer analyst Brian Nagel started coverage of Restoration Hardware with a Perform rating, as he thinks its longer-term prospects are intriguing but that its near-term challenges will persist and the company's sales are apt to stay sluggish
  • March 18th
Restoration Hardware downgraded to Underperform from Neutral at Buckingham
Buckingham analyst Kelly Halsor downgraded Restoration Hardware to Underperform and lowered her price target to $30 from $33. Halsor's recent channel checks indicate the worst of the supply chain issues may still be ahead and first half 2016 earnings estimate may need to come down further once it reports Q4 results on March 29. Checks reveal supply chain issues at Modern continued into Q1 and the extent of the problem may not be fully understood by the company, the analyst said. Additionally, Halsor said trends decelerated significantly as virtually all promotions in February were eliminated ahead of the Grey Card launch last weekend.
  • March 30th
Restoration Hardware price target lowered to $50 from $55 at UBS
UBS lowered its price target on Restoration Hardware to $50 from $55 following the company's Q4 report. The firm believes the company's long-term potential remains intact and its guidance looks conservative. UBS maintained its Buy rating on Restoration Hardware shares

For the current Fiscal Quarter, 19 analysts have given an Average earnings estimate of $0.05 per share. According to the Analysts, the Low Estimate Earnings of the current Quarter is $0.04 whereas, High Estimate is $0.06. The Previous Year EPS of this Quarter is $0.23.

According to 18 analysts, the Average Revenue Estimate of the current Fiscal quarter is $452.86 Million and according to them, the Low Revenue estimate is $443 Million and High Revenue estimate is $455.67 Million.

Restoration Hardware Holdings, Inc. (NYSE:RH) currently has High Price Target of $75. The Low and Mean Price Targets are $30 and $51.13 respectively. These price targets are a consensus analysis of 16 brokers.

When having a look at Recommendation Trends of the stock polled by Thomson First call. For the Current month, 4 analysts have assigned this stock as Strong Buy where 5 assigned Buy, 10 analysts believe it’s a Hold, 0 said Underperform and 1 assigned Sell rating.



Previous Earnings Report:

March 29th

Restoration Hardware says delivered net revenues increased only 11% in Q4
"While our fourth quarter demand sales/written orders were up a strong 21%, on top of up 26% last year, our delivered net revenues increased only 11% in the quarter, on top of up 24% last year, representing a shortfall to our plan. There are three key factors that had a negative effect on our fourth quarter results. First, while the initial response to RH Modern has been outstanding, we are experiencing shipping delays as certain vendors are struggling to ramp up production of this new product line. We expect these vendors to be substantially caught up by the end of the first half. Second, we continue to see underperformance in markets affected by energy, oil, or currency fluctuations - specifically, Texas, Miami, and Canada - representing a drag of 4 points to total Company revenues in the second half, which has weakened to a 5 point drag quarter to date in Q1. Third, our attempts to drive incremental revenue through increased promotional activity in the fourth quarter were less successful than in prior periods, signaling a further pullback by the high-end consumer," said CEO Gary Friedman


Fourth Quarter Highlights

   -- Demand sales/written orders increased 21% on top of a 26% increase last

   -- Net revenues increased 11% on top of a 24% increase last year

   -- Comparable brand revenues increased 9% on top of a 24% increase last year

   -- Adjusted operating margin of 11.5% compared to 12.7% last year; GAAP
      operating margin of 10.4% compared to 12.9% for the same period last year

   -- Adjusted net income of $41.2 million compared to $42.5 million last year;
      GAAP net income of $33.3 million compared to $42.5 million for the same
      period last year

   -- Adjusted diluted EPS of $0.98 compared to $1.02 last year; GAAP diluted
      EPS of $0.79 compared to $1.02 for the same period last year


The high-end retail market has gone through some difficulties lately, and home furnishings specialist Restoration Hardware (NYSE:RH) has seen its stock take a big hit in response to tough industry conditions. As the company prepares to release its first-quarter results, Restoration Hardware investors aren't certain what to expect, but they're bracing for a big drop in earnings despite remaining hopeful that the company will see its sales rise from year-ago levels. Still, other retailers have had trouble this earnings season, and some fear that Restoration Hardware might not be able to overcome even the low hurdle it has before it. Let's take an early look at what we're likely to see from Restoration Hardware and what its future looks like.

Stats on Restoration Hardware

Expected EPS Growth (78%)
Expected Revenue Growth 7.2%
Forward Earnings Multiple 10.9
Expected 5-Year Annualized Growth Rate 19.5%


Can Restoration Hardware earnings rebound?

In recent months, investors have gotten much less optimistic about Restoration Hardware earnings. They've marked down their fiscal first-quarter estimates by almost three-quarters, and they've reduced their full-year projections for the current and next fiscal years by more than 10% each. The stock has continued to languish, falling another 16% since late February.

Restoration Hardware's fiscal fourth-quarter results included a number of challenges that the retailer has faced. Revenue was up 11% from the year-ago quarter, but net income declined more than expected. The company said that production delays from its RH Modern suppliers prevented Restoration Hardware from delivering on all of its orders, and it also pointed to weakness in areas of the country that had previously provided substantial growth because of the long energy boom. Promotional activity that Restoration Hardware used to try to increase its revenue wasn't as successful as hoped, and the retailer cited the general negative environment for high-end retail as a contributing factor to its sluggish results. Negative guidance for the full fiscal year also gave investors pause about the company's longer-term prospects.

Yet one interesting response that Restoration Hardware has implemented takes a page from the warehouse retail business model. The new RH Grey Card aims to address the mixed success of the retailer's promotional strategy by offering a 25% discount to anyone willing to pay the $100 annual fee for the card. The move caters to the demand among shoppers for discounts, something that is even affecting the upper end of the retail industry. Nevertheless, as other retailers have discovered, implementing an alternative method for savings won't necessarily stop other shoppers from continuing to demand the promotions that they've grown used to seeing from Restoration Hardware in the past.

Still, one problem that Restoration Hardware faces is that its competitors aren't seeing all the same negative trends that it has experienced. General home-improvement retailers like Home Depot have continued to take full advantage of the booming housing market, finding ways to keep growing even as fears about rising interest rates have some wondering how long housing can help support the overall U.S. economy. Some of Restoration Hardware's higher-end peers haven't seen pullbacks to the same extent, either, even though the broader environment for non-furnishings retailers has been ugly across the industry.

In the Restoration Hardware report, shareholders need to see how well the company's strategic moves have panned out so far. It's early to expect substantial results from the RH Grey Card, but if the company's explanations for supplier delays were correct, then some of the pent-up order fulfillment should actually boost the retailer's numbers. If that doesn't happen, then investors will need to be even more cautious about Restoration Hardware going forward.


RH to Report First Quarter Fiscal 2016 Financial Results on June 8, 2016 CORTE MADERA, Calif.--(BUSINESS WIRE)--June 01, 2016--

RH (NYSE:RH) today announced that it will report financial results for the first quarter ended April 30, 2016 on Wednesday, June 8, 2016 after market close. At that time, RH will post a video presentation highlighting the Company's continued evolution and recent performance on the RH Investor Relations website at

RH leadership will then host a live question and answer conference call and audio webcast at 2:30 p.m. Pacific Time (5:30 p.m. Eastern Time). The live question and answer conference call may be accessed by dialing (866) 394-6658 or (706) 679-9188. The call and replay can also be accessed via audio webcast at


Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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