Editor's note: This is an excerpt from our retail sector team led by Brian McGough.
Restoration Hardware - 2Q14 Earnings Preview
Takeaway: We think that people are missing the magnitude of earnings growth at RH, the sustainability of that trajectory over a long period of time, and ultimately the degree to which that will accrue to equity holders.
The question is not whether the stock will go to $90 vs $100 (where we see most price targets), but whether it will get to $200 vs $300.
Even the best stories, however, are not linear. There will be bumps along the road. But this print should not be one of them. We’re well above the Street in Sales, Margins and EPS, and we flush out in this note where we could be wrong.