Restoration Hardware (NYSE:RH) stock hasn’t always been top-of-mind among traders seeking buzz-worthy names to load up on. Yet, the company actually caught people’s attention recently as a major event is about to take place.
Not long ago, Restoration Hardware released two crucial press releases. Suddenly, Wall Street had no choice but to pay attention to this typically under-the-radar business.
First, Restoration Hardware disclosed its intention to execute a three-for-one common-stock-share split. With that announcement, Restoration Hardware joined the ranks of other participants in stock-split mania, such as Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA).
Granted, RH stock isn’t as expensive as those other stocks. Still, it should make it easier for investors to buy shares of Restoration Hardware if the share price is closer to $113 than $340.
Over time, stocks that have split (forward, not reverse) sometimes tend to perform well post-split. For example, anyone who invested in Tesla immediately after its previous share split has fared quite well.
Also, Restoration Hardware released the company’s fourth-quarter 2021 and fiscal 2021 financial results. As it turns out, the company’s fourth-quarter GAAP net revenue increased 11% to $903 million. Even better, Restoration Hardware’s fiscal 2021 GAAP net revenue improved by 32%, reaching $3.76 billion.
Prospective investors should also know that Restoration Hardware’s trailing 12-month price-to-earnings ratio is just 15.4x. So, even pre-split, RH stock isn’t really expensive from a valuation perspective.
When should investors expect the split to occur, then? According to the company, the share split is “expected to be executed in the spring.”
Hence, it shouldn’t be very long now, assuming everything goes according to plan. Restoration Hardware is a profitable company that’s trading at a reasonable valuation. This makes RH stock attractive, split or no split.
That being said, there’s a window of opportunity here. You can choose to own shares of Restoration Hardware before the upcoming share split is enacted. It’s not a bad idea, since more investors are likely to jump into the trade afterwards.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
