Restoration Hardware (RH) stock is trading at nearly three times the value of its initial public offering in 2012. The American furniture chain has captured a lot of attention this year in part due to the success of its stock and the company's year-over-year earnings growth. Since its IPO Restoration Hardware has beaten the Wall Street expectations for both EPS and revenue three out of three times.
RH is expected to report FQ3' 2014 earnings on Thursday, December 12th. The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for RH to report 28 cent EPS and $390.4M revenue while the current Estimize consensus from Buy Side and Independent contributing analysts is 31 cent EPS and $394.23M revenue. The Estimize consensus is more accurate than Wall Street up to 69.5% of the time because it represents unbiased market expectations. Last quarter the Estimize consensus for RH was more accurate on both EPS and revenue. By tapping into a wider distribution of over 3,300 contributors including buy side and independent analysts, industry experts, students and non professionals Estimize is better able to capture the true market outlook. The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case, we're seeing a larger differential between the Estimize and Wall Street numbers compared to last quarter.
Over the past four months the Wall Street consensus trend for EPS has increased from 16 cents to 28 cents while the revenue expectations have also increased significantly from $366.24M to $390.4M. The Estimize EPS consensuses dropped from 32 cents to 31 cents while the revenue consensus also dipped from $395.03M to $394.23M.
The distribution of estimates published by analysts on Estimize range from 30 cents to 34 cents EPS and $392.00M to $398.00M in revenues. We're seeing a wider distribution of estimates this quarter for RH compared to September. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution signaling the potential for greater volatility post earnings, a smaller vice versa.
The analyst with the highest estimate confidence rating this quarter is kc who projects 30 cents EPS and $392.1M in revenue. Estimize confidence ratings are calculated through algorithms developed by our deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. kc who is ranked 95 overall among 3,330 contributing analysts is making a call that lies between the Estimize and Wall Street consensuses.
The consensus from Estimize is that Restoration Hardware will exceed Wall Street expectations on both EPS and revenue for a fourth consecutive time since its 2012 IPO. If RH can live up to the hype and meet analyst expectations we could see the stock continue to grow well into the new year.