Trade-Ideas LLC identified

Restoration Hardware Holdings

(

RH

) as a strong on high relative volume 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 $144.6 million.
  • RH has traded 1.3 million shares today.
  • RH is trading at 2.19 times the normal volume for the stock at this time of day.
  • RH is trading at a new high 4.04% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on RH:

Restoration Hardware Holdings, Inc., together with its subsidiaries, engages in the retail of home furnishings. Its product categories include furniture, lighting, textiles, bathware, decor, outdoor and garden, tableware, and children's furnishings. RH has a PE ratio of 19. Currently there are 9 analysts that rate Restoration Hardware Holdings a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Restoration Hardware Holdings has been 2.5 million shares per day over the past 30 days. Restoration Hardware has a market cap of $1.8 billion and is part of the services sector and retail industry. The stock has a beta of 1.55 and a short float of 26.1% with 2.51 days to cover. Shares are down 47.1% year-to-date as of the close of trading on Monday.

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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, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and disappointing return on equity.

Highlights from the ratings report include:

  • RH's revenue growth has slightly outpaced the industry average of 10.5%. Since the same quarter one year prior, revenues rose by 11.1%. 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 0.75, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • 37.54% is the gross profit margin for RESTORATION HARDWARE HLDNGS which we consider to be strong. Regardless of RH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.14% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Specialty Retail industry and the overall market, RESTORATION HARDWARE HLDNGS's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Looking at the price performance of RH's shares over the past 12 months, there is not much good news to report: the stock is down 57.76%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, RH is still more expensive than most of the other companies in its industry.

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