Trade-Ideas LLC identified

Restoration Hardware Holdings

(

RH

) as a "dead cat bounce" (down big yesterday but up big today) 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 $126.8 million.
  • RH has traded 87,931 shares today.
  • RH is up 3.3% today.
  • RH was down 25.9% yesterday.

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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 21. Currently there are 11 analysts that rate Restoration Hardware Holdings a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Restoration Hardware Holdings has been 1.6 million shares per day over the past 30 days. Restoration Hardware has a market cap of $2.1 billion and is part of the services sector and retail industry. The stock has a beta of 1.31 and a short float of 32.7% with 3.07 days to cover. Shares are down 34.6% year-to-date as of the close of trading on Wednesday.

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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, reasonable valuation levels and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.

Highlights from the ratings report include:

  • RH's revenue growth has slightly outpaced the industry average of 8.0%. Since the same quarter one year prior, revenues slightly increased by 9.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 6.6% when compared to the same quarter one year prior, going from $19.43 million to $20.71 million.
  • Net operating cash flow has significantly decreased to -$31.25 million or 548.54% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • RH's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 40.17%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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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