RH (RH) Surges 9.5%: Is This an Indication of Further Gains?

RH (RH) shares ended the last trading session 9.5% higher at $140.15. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 2.7% gain over the past four weeks.

RH is benefiting from the expansion of its RH Estates collection, new gallery openings and international expansion plans, which are expected to support its long-term growth.

This furniture and housewares company is expected to post quarterly earnings of $0.67 per share in its upcoming report, which represents a year-over-year change of -60.8%. Revenues are expected to be $932.39 million, up 5.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For RH, the consensus EPS estimate for the quarter has been revised 30.6% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on RH going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

RH belongs to the Zacks Consumer Products - Staples industry. Another stock from the same industry, Clorox (CLX), closed the last trading session 4.6% higher at $88.66. Over the past month, CLX has returned 1%.

Clorox's consensus EPS estimate for the upcoming report has changed -1.2% over the past month to $0.98. Compared to the company's year-ago EPS, this represents a change of +15.3%. Clorox currently boasts a Zacks Rank of #4 (Sell).

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This article originally published on Zacks Investment Research (zacks.com).

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