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NEW YORK (TheStreet) -- Restoration Hardware (RH) has been upgraded by TheStreet Ratings from Hold to Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate RESTORATION HARDWARE HLDNGS (RH) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 13.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- RESTORATION HARDWARE HLDNGS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, RESTORATION HARDWARE HLDNGS turned its bottom line around by earning $0.42 versus -$0.34 in the prior year. This year, the market expects an improvement in earnings ($2.33 versus $0.42).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 252.8% when compared to the same quarter one year prior, rising from -$17.84 million to $27.25 million.
- 40.63% is the gross profit margin for RESTORATION HARDWARE HLDNGS which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.28% trails the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: RH Ratings Report