What Happened?
Shares of luxury furniture retailer RH (NYSE: RH) jumped 19.4% in the pre-market session after the company reported strong third-quarter results. It was great to see RH raise its full-year revenue and EBITDA guidance. Notably, demand for RH's products accelerated in the quarter, and continued to strengthen into the final quarter of the year, a positive growth indicator amid recent macroeconomic challenges. On the other hand, this quarter's gross margin and EBITDA fell short of Wall Street's estimates while revenue was in line, but the market seemed to weigh the outlook more.
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What The Market Is Telling Us
RH’s shares are very volatile and have had 27 moves greater than 5% over the last year. But moves this big are rare even for RH and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 23.3% on the news that the company reported strong second-quarter earnings results. RH beat analysts' gross margin expectations. In addition, its revenue and EPS narrowly outperformed Wall Street's estimates. The result is encouraging, especially in a challenging housing market that has been frozen by high interest rates and waiting to thaw as the Fed's rate cuts are upcoming. Interestingly, the top line reflected market share gains in North America for RH's business. Also, the company is expanding to other regions, with plans for new locations in Paris, London, and Milan by 2026. The expansion underscores investments in growth opportunities that could benefit the business as the macro environment improves. Overall, this was an impressive quarter for the company.
RH is up 52.9% since the beginning of the year, and at $437.20 per share, has set a new 52-week high. Investors who bought $1,000 worth of RH’s shares 5 years ago would now be looking at an investment worth $1,997.
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