Restoration Hardware Holdings (RH) Falls Further As It's Water-Logged And Getting Wetter

Trade-Ideas LLC identified Restoration Hardware Holdings (RH) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Restoration Hardware Holdings

(

RH

) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Restoration Hardware Holdings as such a stock due to the following factors:

  • RH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $80.4 million.
  • RH has traded 2.7 million shares today.
  • RH traded in a range 216.7% of the normal price range with a price range of $3.29.
  • RH traded below its daily resistance level (quality: 7 days, meaning that the stock is crossing a resistance level set by the last 7 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in RH with the Ticky from Trade-Ideas. See the FREE profile for RH NOW at Trade-Ideas

More details on RH:

Restoration Hardware Holdings, Inc., together with its subsidiaries, engages in the retail of home furnishings. It offers products in various categories, such as furniture, lighting, textiles, bathware, decor, outdoor and garden, tableware, and child and teen furnishings. RH has a PE ratio of 13. Currently there are 3 analysts that rate Restoration Hardware Holdings a buy, 1 analyst rates it a sell, and 12 rate it a hold.

The average volume for Restoration Hardware Holdings has been 2.8 million shares per day over the past 30 days. Restoration Hardware has a market cap of $1.2 billion and is part of the services sector and retail industry. The stock has a beta of 1.59 and a short float of 36.1% with 3.32 days to cover. Shares are down 61.4% year-to-date as of the close of trading on Tuesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Restoration Hardware Holdings as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 7.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.80, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.93 is somewhat weak and could be cause for future problems.
  • The gross profit margin for RESTORATION HARDWARE HLDNGS is currently lower than what is desirable, coming in at 32.44%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.95% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$106.29 million or 639.21% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

Loading ...