Will Restoration Hardware (RH) Miss Earnings This Season? - Analyst Blog

Restoration Hardware Holdings, Inc. RH, a prominent name in home furnishings, is set to report its first-quarter fiscal 2014 results on Jun 11, 2014. Last quarter, it posted in line earnings. Let us see how things are developing for this announcement.

Factors Influencing the Quarter

A difficult retail environment along with inclement weather in the initial part of the year remains a drag on the retail sector. Restoration Hardware might not prove to be an exception. The company plans to maintain its focus on 2 key strategies, i.e., transformation of its retail outlets and expansion of its offer. Restoration Hardware's Spring 2014 Source Books will make expansion of its offer more prominent. It remains to be seen as to what extent these strategies will prove helpful in driving quarterly sales.

Earnings Whispers

Our proven model does not conclusively project Restoration Hardware as likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below.

Zacks ESP:  ESP (Expected Surprise Prediction) for Restoration Hardware is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate both stand at 10 cents.

Zacks Rank: Restoration Hardware's Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise. We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these to have the right combination of elements to post an earnings beat:  

BlackBerry Limited BBRY with an Earnings ESP of +14.29% holds a Zacks Rank #3.

United Natural Foods, Inc. UNFI with an Earnings ESP of +2.70% holds a Zacks Rank #3.

HD Supply Holdings, Inc. HDS has an Earnings ESP of +17.65% and a Zacks Rank #3.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
RESTORATION HDW RH: Free Stock Analysis Report
 
HD SUPPLY HLDGS HDS: Free Stock Analysis Report
 
UTD NATURAL FDS UNFI: Free Stock Analysis Report
 
BLACKBERRY LTD BBRY: Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research