NEW YORK (TheStreet) -- Shares of Restoration Hardware Holdings Inc. (RH) were rising, higher by 4.33% to $99.84 in early market trading Friday, following an upgrade by analysts at BB&T Capital this morning.
The firm raised its rating on the luxury home-furnishings retailer to "buy" from "hold" with a $120 price target.
BB&T analysts said they believe the potential for the company's new RH Modern product line is encouraging.
Corte Madera, Calif.-based Restoration Hardware is a luxury home furnishings retailer that offers various categories, including furniture, lighting, textiles, bathware, decor, outdoor and garden, tableware and children's furnishings.
The company operates about 67 retail stores and 17 outlet stores in roughly 29 states, located primarily in upscale malls and street locations.
Separately, TheStreet Ratings team rates RESTORATION HARDWARE HLDNGS as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate RESTORATION HARDWARE HLDNGS (RH) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- RH's revenue growth has slightly outpaced the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 15.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- 36.64% 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 1.69% 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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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.
- You can view the full analysis from the report here: RH Ratings Report