Why RH Stock Is Looking Absurdly Cheap
RH (NYSE: RH) CEO Gary Friedman has never been one to mince words, and he didn't let investors down in the latest earnings report. Friedman said, "the housing market has collapsed" on the recent earnings call, and the company's results show that it has quickly gone from enjoying pandemic-era tailwinds to suffering the opposite. Higher mortgage rates have soured demand in the housing market.
Revenue in the quarter fell 14% to $869 million, though that topped the company's own guidance and the analyst consensus of $838.1 million. On the bottom line, the company also delivered stronger-than-expected profitability, with an adjusted operating margin of 20.8%. Though that was down from 27.7% in the year-ago quarter, Friedman said the company resisted the kind of discounting that has become rife across the industry, choosing to accept the short-term risk of market-share loss in exchange for avoiding the long-term risk of brand erosion.
RH's adjusted earnings per share slipped from $7.03 to $5.67, but that beat the average estimate at $4.70. Finally, it tweaked its full-year guidance, slightly lowering its revenue-growth forecast to 3.5%-4.5% from 3.5%-5.5%, but it raised its adjusted operating margin outlook of 21.5%-22%, up from 21%-21.5%.
Source Fool.com
