RH stock (RH) is on the move today, up over 20% at the time of this writing and we see RH stock moving even higher as the day moves on. The question is why is RH stock rallying like this? Well, despite the speculation, the stock continues to motor higher because it just updated its outlook. Not only did it update the outlook, but the revised guidance was so surprising that investors immediately bid the name up, pressuring shorts in RH stock. So what kind of numbers are we talking about here? Here is the revised guidance driving up RH stock:

Adjusted net revenues for the third quarter fiscal 2017 are now expected to be approximately $592.5 million, an increase of 8% versus $549.3 million last year, despite an approximate 1% negative impact from Hurricanes Harvey and Irma. This compares to RH’s prior guidance of adjusted net revenues in the range of $575 million to $590 million, or an increase of 5% to 7% compared to last year. On a GAAP basis, net revenues are expected to be approximately $592.5 million for the third quarter.

Adjusted net income for the third quarter is now expected to be in the range of $24.0 million to $24.5 million, compared to $8.0 million last year, despite a negative impact of approximately $1.3 million from Hurricanes Harvey and Irma. The outlook also includes a positive impact of approximately $2.5 million related to a lower effective tax rate. This compares to RH’s prior guidance of adjusted net income in the range of $16 million to $19 million. On a GAAP basis, net income for the third quarter is expected to be in the range of $12.5 million to $13 million.

Adjusted diluted earnings per share for the third quarter is now expected to be in the range of $1.02 to $1.04, compared to $0.20 last year, despite a negative impact of approximately $0.05 per share from Hurricanes Harvey and Irma. The outlook also includes a positive impact of approximately $0.11 per share related to a lower effective tax rate. This compares to RH’s prior guidance of adjusted diluted earnings per share in the range of $0.68 to $0.80. On a GAAP basis, diluted earnings per share for the third quarter is expected to be in the range of $0.54 to $0.56.

RH stock is really moving as RH increased its fourth quarter adjusted net income guidance to a range of $37 million to $41 million, from a range of $33 million to $37 million, despite an approximate $1.5 million negative impact as a result of RH’s decision to delay the opening of its New York Design Gallery to Spring-Summer 2018. This outlook reflects the benefits of improved business performance and assumes an approximate $2 million tax benefit which corresponds to an expected 35% tax rate.

Adjusted net revenues for the fourth quarter are now expected to be in the range of $655 million to $680 million due to a $9 million negative impact due to RH’s decision to delay the opening of its New York Design Gallery. This compares to the Company’s prior adjusted net revenue guidance range of $664 million to $689 million.

RH is increasing its fiscal 2017 adjusted net income guidance to a range of $82 million to $87 million, from a range of $70 million to $77 million, despite the Company’s decision to delay the opening of its New York Design Gallery RH now expects fiscal 2017 capital expenditures in the range of $120 million to $130 million compared to its prior guidance range of $120 million to $140 million. Finally. RH stock is moving because it now expects to generate free cash flow in the range of $420 million to $440 million in fiscal 2017.

What do you think of RH stock here?

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