To The Moon

$RH(RH)$ is scheduled to report its second-quarter fiscal 2025 financial results on Thursday, September 11, 2025, after the market closes.

This report is highly anticipated as it will provide a crucial update on the company's performance amidst a challenging macroeconomic environment.

Earnings Per Share (EPS): The consensus EPS forecast for Q2 2025 is approximately $3.19. This represents a significant increase from the reported EPS of $1.69 in the same quarter last year.

Revenue: While specific revenue forecasts are less prominent, analysts are forecasting annual revenue growth for the fiscal year. Investors should pay close attention to the actual revenue figure and its year-over-year change, as it will be a key indicator of consumer demand for RH's luxury home furnishings.

Summary of RH (RH) Fiscal Q1 2025 Earnings

RH reported its fiscal first-quarter 2025 results in mid-June, delivering a performance that was mixed but largely seen as positive by the market.

Earnings Beat: The company surprised investors by reporting a profit. Adjusted earnings per share (EPS) came in at $0.13, significantly beating the analyst consensus forecast of a loss of about -$0.07 per share. This marked a reversal from the loss of -$0.40 per share in the same period a year prior.

Revenue Miss: While the bottom line was a pleasant surprise, revenue of $814 million slightly missed analyst expectations of approximately $818 million. Despite the miss, revenue grew by a notable 12% year-over-year.

Margin Improvement: RH demonstrated its ability to manage costs and maintain pricing power, as both its adjusted operating margin and adjusted EBITDA margin were at the high end of its expectations.

Positive Cash Flow: The company generated positive free cash flow of $34 million for the quarter, a significant improvement from the negative free cash flow reported in the prior-year period.

Strategic Progress: RH's strategic initiatives, particularly its international expansion, showed positive momentum. Demand growth in its European galleries, such as RH Munich and RH Dusseldorf, was robust at 60%. The company also highlighted its efforts to shift production away from China to mitigate tariff-related risks.

The market's initial reaction was highly positive, with the stock surging by as much as 20% in after-hours trading, despite the slight revenue miss. This reaction was primarily driven by the unexpected profitability and the company's confident outlook.

Lesson Learned from Q1 2025 Guidance

The most critical lesson from RH's Q1 2025 earnings and guidance is that the market's focus can shift from top-line growth to profitability and future outlook, especially for a premium brand navigating economic uncertainty.

Here is a breakdown of the key takeaways from the guidance given and the subsequent market reaction:

1. Profitability Outweighs Revenue in a Tough Environment:

The fact that RH reported a surprise profit was the dominant factor in its stock's post-earnings rally. This demonstrates that for a company facing a "worst housing market in almost 50 years" and tariff uncertainty, showing an ability to control costs and generate positive cash flow is more important than hitting a revenue target. The market was willing to overlook a minor revenue miss in favor of solid evidence of profitability and operational efficiency.

2. The Power of Reaffirmed Guidance:

Despite the headwinds and the mixed Q1 results, RH reaffirmed its full-year fiscal 2025 guidance. This was a crucial signal of confidence from management. The company maintained its outlook for revenue growth of 10% to 13% and an adjusted operating margin of 14% to 15%. This strong reaffirmation, coupled with the Q1 profitability, convinced investors that the company's long-term strategy and brand strength were intact.

3. Long-Term Strategy Trumps Short-Term Headwinds:

CEO Gary Friedman's commentary consistently emphasized a long-term view. He highlighted the company's "inch wide and a mile deep" philosophy of investing in iconic global locations and expanding its brand, even during a downturn. This narrative, backed by the strong performance of its new European galleries, reassured the market that RH was not just surviving but actively gaining market share and building a more resilient, globally-recognized brand.

In essence, the lesson for investors is that a company's ability to demonstrate a clear path to long-term profitability and strategic execution—even when short-term numbers are a mixed bag—can be a powerful catalyst for a stock. For RH, the Q1 report showed a masterclass in managing expectations and providing a compelling long-term narrative that eclipsed the minor blemishes in its quarterly results.

Key Metrics for Investors to Watch

1.Guidance:

Guidance: A major factor that could influence the stock's performance is the company's outlook for the remainder of the fiscal year. Any revisions to full-year guidance for EPS and revenue will be a primary driver of post-earnings price movement.

2. Margins:

Operating Margin: The retail and home goods sectors have faced headwinds from inflation, supply chain issues, and a slowing housing market. Investors will be scrutinizing RH's operating margin. Analyst expectations for the full year suggest a potential increase to around 15%, but this may be challenged by factors like higher depreciation and input costs.

Gross Margin: This will be a critical measure of the company's pricing power and its ability to manage production costs.

3. Macroeconomic and Strategic Commentary:

Consumer Demand: The state of the luxury consumer is paramount for RH. The company's commentary on demand trends, especially in a high-interest-rate environment and with a softening housing market, will be crucial.

Operational Updates: RH's business is heavily focused on its gallery concept and brand elevation. The shareholder letter from CEO Gary Friedman will likely provide updates on the performance of its new and existing galleries, as well as the progress of its global expansion efforts, such as the new gallery in Paris.

Inventory Levels: A key indicator of a company's health is its inventory. Investors should look for updates on inventory management and whether the company is facing excess stock or is successfully aligning inventory with demand.

RH (RH) Price Target

Based on 16 analysts from Tiger Brokers offering 12 month price targets for RH in the last 3 months. The average price target is $264.32 with a high forecast of $436.00 and a low forecast of $179.00. The average price target represents a 13.45% change from the last price of $232.98.

Opportunities for Short-Term Trading Post-Earnings

Trading RH stock after an earnings report is often a high-risk, high-reward proposition due to the stock's history of volatility. Here are some potential strategies and considerations:

1. Volatility and Price Movement:

Historical Volatility: RH stock is known for its significant price swings, especially around earnings announcements. The stock has experienced 39 moves greater than 5% over the last year. This volatility presents opportunities for traders who are comfortable with the risk.

RH (RH) had 30-Day Historical Volatility (Close-to-Close) of 0.7719 for 2025-09-08.

Earnings Surprise: The magnitude of the "beat" or "miss" relative to analyst consensus is a key driver. A significant earnings surprise, either positive or negative, could lead to a sharp move in the stock price.

2. Potential Trading Scenarios:

Bullish Scenario: If RH beats both EPS and revenue expectations and provides a strong, optimistic outlook for the rest of the year, especially regarding consumer demand and margin expansion, the stock could experience a strong upward movement. Traders might consider a long position or a long call option strategy.

Bearish Scenario: If the company misses analyst estimates, provides a weak outlook due to persistent macroeconomic headwinds, or if its margins show signs of significant compression, the stock could sell off sharply. This could present a shorting opportunity or a chance to purchase put options.

Sideways/Consolidation: The market reaction could also be mixed, leading to consolidation. For example, if the company beats on the top line but misses on the bottom line, or if the guidance is cautious despite a solid quarter. In this case, a breakout or breakdown of a key technical level might be a trigger for a trade.

3. Technical Analysis:

Support and Resistance: Before the earnings report, RH's stock was trading in a medium-term rising trend channel. Key levels to watch post-earnings are the support at around $214 and resistance at approximately $245. A clear break above or below these levels could signal the next direction of the stock.

Volume: Increased trading volume on the day of and after the earnings report can confirm the direction of the price movement.

Exponential Moving Average (EMA) and RSI Momentum

Though we can see that RH is still enjoying the positive RSI momentum, and RH is currently trading below 200-day period, but we could see that the bulls is trying to regain control, but we need to see a strong earnings beat, and increased operating margins.

We as investors need to be aware of this stock volatility because we can see that RH could be affected by economics factor like the CPI and PPI, as rate cut would mean increased demand for housing.

Summary

RH is set to release its Q2 2025 earnings on Thursday, September 11, 2025, after the market closes. The company's performance will be closely watched by investors due to its previous mixed results and volatile stock history. Key metrics to watch include:

Earnings per Share (EPS) and Revenue: Analysts forecast an EPS of around $3.19, a significant jump from last year. Any surprise, positive or negative, will likely trigger a large stock move.

Guidance: The company's updated full-year outlook for revenue and margins will be the most critical factor. Reaffirming or raising guidance would signal management's confidence in the face of macroeconomic headwinds.

Margins: Investors will scrutinize gross and operating margins to see if RH can maintain profitability and pricing power amid a challenging housing market and potential tariff impacts.

Post-earnings, the stock's high volatility could present short-term trading opportunities. A strong report with optimistic guidance could lead to a rally, while a miss or cautious outlook could trigger a sell-off.

Appreciate if you could share your thoughts in the comment section whether you think RH would be able to post an earnings beat considering that investors might be shifting to housing sector as part of rotation.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.