Restoration Hardware Earnings Preview: Crowd More Bullish Than Experts & Management

Shares of Restoration Hardware Holdings Inc RH are surging on Wednesday, ahead of the announcement of the company’s first quarter financial results, scheduled for Thursday afternoon, after the market close.

The company guided a 5.5 percent year-over-year increase in earnings, from $0.18 per share reported in the same quarter last year, to $0.19 per share expected for this quarter. In the revenue front, the surge is expected to reach almost 14 percent, as management guided sales of $417.5 million.

According to Estimize, experts pretty much agree with management, and guided earnings only a cent above guidance, at $0.20 per share, on revenue of $418.95 million.

However, the crowd is considerably more bullish, and projects consensus earnings of $0.28 per share, up 55 percent year-over-year, on revenue of $434.79 million. It should be noted, however, that the consensus here was pushed slightly upwards by two outliers -- see scatter plot.

Two more things should be observed in the chart above. In the first place, that the company has a history of either meeting or surpassing estimates and guidance; so, a beat could be expected this quarter. In the second place, that current consensus implies a steep decline from earnings of $0.64 per share reported in the first quarter of 2013.

New Businesses

A couple of months ago, Restoration Hardware announced it would launch two new businesses. Although the details were scarce, Stifel's David A. Schick said one might involve baby and children's products.

Related Link: Analyst: Restoration Hardware To Add Kids' Stuff

"The other may be bigger," the expert added, despite being able to offer little further insight, and to note merely "the absence of talk of art gallery or apparel."