Is Restoration Hardware (RH) an Incredible Growth Stock? 3 Reasons Why It Will Be Tough to Beat – Tale of the Tape

One such company that stands out in this regard is undoubtedly Restoration Hardware Holdings, Inc. (RH). Not only does this company have a favorable growth score, but it is ranked as a buy too. And while there are numerous reasons why RH is so attractive right now, we have highlighted three of the most important—and pertinent to growth investors—below:

Earnings Growth for RH

Arguably nothing is more important than earnings growth as surging profit levels is what most investors are after. And for growth investors, earnings growth in the double digits is definitely necessary and it is often an indication of strong prospects (and stock price gains) ahead for the company in question.

Investors should really focus on the projected EPS growth. Here, RH is looking to grow at a rate of 28.78%, thoroughly crushing the industry average which calls for EPS growth of just 12.58% in comparison.

Cash Flow Growth for RH

Cash is the lifeblood of any business, but especially so for growth oriented companies. A positive figure here indicates that cash is flowing into the business (obviously a good thing), while a negative reading here means that net cash is exiting the company.

Right now, RH’s current cash flow growth is well over 100%, a level that is far higher than many of its peers, and the industry average. In fact, the industry average sees cash flow growth of just 2.97% in comparison, suggesting that RH is a better pick from a cash flow look.

RH Earnings Estimate Revisions Moving in the Right Direction

If the metrics outlined above weren’t enough investors should also consider the positive trends that we are seeing on the analyst estimate revision front. Analysts have been raising their estimates for Restoration Hardware lately, and now the earnings picture is looking a bit more favorable for the company.

Over the past 30 days 10 EPS estimates have been revised higher compared to 2 lower, at least for the current year time frame. And the magnitude of these revisions has also been impressive, as the consensus estimate for the full year has increased from $2.98 per share to $3.04 per share today.

Bottom Line

For the reasons outlined above, investors shouldn’t be surprised to note that Restoration Hardware has earned itself a growth score of ‘A’ as well as a Zacks Rank #2 (Buy). This means that we believe Restoration Hardware stock is a potential outperformer that is an impressive choice for growth investors, making it a security that you need to keep on your radar in the near term.

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