RH tops analysts’ estimates for revenue and earnings per share in the third quarter of 2019

on Dec 7, 2019
Updated: Mar 11, 2020
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  • RH beat analysts' estimates for revenue and earnings per share in 2019's Q3.
  • RH has noted a gain of 72% (year-to-date) in the stock market in 2019.
  • Warren Buffett's Berkshire Hathaway has a $206 million stake in RH.

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Previously
known as Restoration Hardware, California-based home furnishings company, RH
announced its earnings report for the third quarter on Wednesday. Having beaten
the analysts’ estimates, the stock was seen gaining in the after-hours trading
on Wednesday. Share prices were reported to have remained upbeat throughout the
rest of the week.

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Despite
the positive performance results
for 2019’s Q3, the company kept its
forecast for the current quarter unchanged. In the third quarter, based on
Refinitiv’s survey, analysts were expecting the home furnishings business to
print $676 million in revenue. The estimate for earnings per share (EPS) was
highlighted at $2.23. As per the report, the company narrowly beat the estimate
for revenue, recording $677 million in the third quarter. At $2.79, EPS,
however, topped the estimate by a significant margin.

RH’s
Net Income Rose To $52.5 Million From $20.1 Million Last Year

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In
terms of net income, RH gained sharply to $52.5 million in the third quarter of
2019, compared to a much lower $20.1 million in the same quarter last year.
Earnings per share in 2018’s Q3 were reported at 73 cents per share. On the
other hand, growth in revenue was marked at 6% year-over-year. RH had announced
its revenue in the third quarter of 2018 at $636 million.

Following
the positive results, the company revised its guidance for fiscal 2019. Anticipation
for earnings per share now lies between $11.58 and $11.70. In a previous
estimate, RH had capped its EPS for fiscal 2019 at $11.01. While the revenue
for full-year was earlier forecasted at $2.68 billion, RH raised its guidance
slightly to $2.69 billion following the Q3 earnings report.

According
to the stock market analysts, RH’s market capitalization is capped at $3.8
billion for now. However, with RH’s plans of going international in the
upcoming years of 2021 and 2022, the potential valuation can be expected to go
as high as $20 billion. In a recent announcement, the company declared that its
real estate transactions have been finalized in five to seven locations in Europe.

Warren
Buffett’s Berkshire Hathaway Has A $206 Million Stake In RH

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Earlier
in November, Warren Buffett’s Berkshire Hathaway declared its $206 million
stake in the house furnishings company in an SEC filing of September. According
to FactSet, such a sizeable investment wins Berkshire Hathaway a reputation of the
fourth largest in the list of RH’s shareholders.

Despite
the complications between the United
States of American and China
on the trade front, RH has managed to record a
massive 72% gain (year-to-date) in the stock market in 2019. Buffett’s investment
and analysts’ optimism regarding RH’s stock has contributed the most for the
largely positive performance in 2019.

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