24-Feb-16 16:11 ET
Restoration Hardware guides Q4 well below consensus (51.92 +0.66)
Sees Q4 adj. EPS $0.99 vs $1.39 Capital IQ Consensus Estimate; revs +11% to $647 mln vs $710.85 mln Capital IQ Consensus; comp brand rev +9% vs. ests near +19%.
There are three key factors that had a negative effect on our fourth quarter results, along with several positive developments that give us tremendous confidence in our long-term growth strategy.
- “First, our demand sales/written orders were up a strong 21% in the fourth quarter on top of up 26% last year. Our delivered revenue, however, was up only 11% in the quarter on top of up 24% last year, representing a shortfall to our plan. While the initial response to RH Modern has been outstanding, we are experiencing shipping delays as certain vendors are struggling to ramp up production of this new product line. We expect the majority of the demand/written orders to turn into revenues in the first and second quarter, and anticipate our vendors will be substantially caught up by the end of the first half. Additionally, we believe the poor in-stocks also suppressed orders, and we expect demand to build as our in-stocks improve.
- Second, we continue to see underperformance in markets affected by energy, oil, or currency fluctuations. The Canada, Texas and Miami markets were a drag of 2 points to total Company revenues in the first half, then accelerated to a 4 point drag in the third quarter, and continued as a 4 point drag in the fourth quarter despite increased promotional efforts, including reduced shipping charges to incentivize our Canadian customers. These results tell us the conditions remain weak in these markets and in aggregate they are trending 20 points below the rest of the Company. Looking forward, we will begin to cycle the underperformance, and the negative drag should be mitigated.
- Third, our attempt to drive incremental revenue through increased promotional activity in the fourth quarter was less successful than in prior periods, signaling a further pullback by the high-end consumer. Our sense is the increased volatility in the US stock markets, especially the extreme conditions in January, which is historically our biggest month of the quarter for furniture sales, contributed to our performance. Historically, our business has a correlation to large movements in stock prices as we believe asset valuations influence our customers’ buying patterns.”
Courtesy of Briefing.com
Restoration Hardware (RH) has had a bad 3 months, coming down from $106.49 to $37.00 so far today.
NASDAQ tells me their earnings for FY16 were going to be $3.14 and FY17 at $3.79.
With guidance for the quarter 40 cents lower and the next quarter in doubt I would take 60 cents off FY16. That takes us to $2.54.
There is a gap fill that may start the bounce at $34.31. Following that is support at $33.54 with a candlestick tail at 32.02.
So the buy area is $34.31 and $32.02.
Your stop price should just under $32.00.
The heavy green line you see in the chart above is 50 % retracement from a bottom at $32.02. Whether the bounce is from $34.31 or $32.02 the target of $42.04 is worthwhile.
Sells CRI short 98.74
25-Feb-16 06:22 ET
Carter Holdings beats by $0.11, beats on revs; guides Q1 EPS, revs below consensus; guides FY16 EPS below consensus, revs above consensus (88.19)
Reports Q4 (Dec) earnings of $1.40 per share, $0.11 better than the Capital IQ Consensus of $1.29; revenues fell 0.3% year/year to $866.54 mln vs the $854.29 mln Capital IQ Consensus.
- Co issues downside guidance for Q1, sees EPS of ~$0.97 (Comparable to prior year) vs. $1.10 Capital IQ Consensus Estimate; sees Q1 revs of ~$712.15 mln (+~4%) vs. $726.56 mln Capital IQ Consensus Estimate.
- Co issues mixed guidance for FY16, sees EPS of $4.98-5.07 (+~8-10%) vs. $5.11 Capital IQ Consensus Estimate; sees FY16 revs of ~$3.19-3.22 bln (+~6-7%) vs. $3.18 bln Capital IQ Consensus Estimate.
- As part of the Company’s ongoing commitment to return capital to shareholders, the Company’s Board of Directors on February 24, 2016 authorized a new $500 million share repurchase program and approved a 50% increase ($0.11 per share) to its quarterly cash dividend, to $0.33 per share, for payment on March 25, 2016, to shareholders of record at the close of business on March 11, 2016.
Although CRI beat by 11 cents they guided down and they are way overvalued.
Resistance is $98.90 to $99.93.
Targets are $96.00 and $93.60.
This is a price action day trade.
Sells most of TLRD 15.25. Plus 52 % in 5 weeks. Not bad.
I am still holding a few hundred shares. Given a little time I think TLRD could return to 25 bucks.
The Markets and Your Stocks
As I have mentioned in other pieces in the blog, about 85 percent of the stocks in the market (DOW-S&P etc.) will follow the market just like a little duckling follows her Mama around. This is all for a simple reason. With no compelling reason to move against the market, trader sentiment, which the market reflects, is where most stocks will go.
Those that aren’t following have some fundamental reason or they have recent news. The result of most news events will dissipate within three to five days unless the news changes the sentiment in the stock greatly.
In the DIA (Dow Jones ETF) chart above the next bottom after the 154.25 low is a little higher. This alone is a good reversal single. The candle at the second bottom is called a doji. A doji candlestick indicates indecision. When you have a gap down to the doji an then a gap up from the doji it is called an island doji and is a very strong reversal signal. The market is telling you in advance that is about to go higher.
I wouldn’t trade this until you get the gap up. From the open the day following the doji the market climbed over seven hundred points in three days.
As you can see in the RCII chart above RCII had bad news 11 days earlier. It had recovered some but the market was falling hard. At the recover (the last four days) RCII moved up and broke out of a descending channel.
Once again with CAR. It had been trading sideways for three weeks with channel resistance at $28.10.
URI is an almost perfect replication of the DIA.
Although this would work with almost any stock I trade only value fundamentals at or very near a support level. If you look back at this time frame (2/11/2016) you can find thousands of stocks with the same chart pattern.
For me the indexes are fairly easy to read. The reason I trade stocks instead of the index’s id the percent of movement you get from the stocks The index may move five percent while the stock moves 20 /25 percent. When you combine that move with a value stock at a good entry you can get much larger moves
Back on 1/20/2016 I bought MW at 10.01. They have since changed their name and the new symbol is TLRD.
The blue line you see on the chart is the high ($14.40) from the recovery off the low of $9.95. This A.M. TLRD tested that and failed. It got to $14.30 And started to back off and sold half the position at $14.17 for a 41 percent gain.
I believe TLRD will eventually reach $20/21.