Home » Stocks & Shares » RH tops analysts’ estimates for revenue and earnings per share in the third quarter of 2019

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

Michael Harris
  • December 7th 2019, 08:24
  • 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.

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.

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

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

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.

About the author

Michael Harris
Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

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