Restoration Hardware One of the Few Exciting Transformations in Retail

Restoration Hardware is currently undergoing a massive real estate transformation. The company is in the early innings of a shift from small, 7,000 foot stores to large, 35,000 - 60,000 square foot "full line design galleries" (FLDGs). The company eventually hopes to triple or quadruple its square footage over time as it adds 70 of these massive stores throughout the country.

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What Investors are Focused on Ahead of FB's 3Q Results

Have you ever seen a company beat consensus EPS estimates, but the stock still goes down? This happens because institutional investors focus on many other line items besides earnings. Here are the key issues (beyond the obvious EPS estimate of $0.52) that investors will be focused on.

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Detailing FB's Longer-Term Revenue Drivers and Bear Case

Facebook is a widely loved stock among both the buy-side and sell-side analysts. One of the reasons for the optimism is Facebook's near-term revenue growth drivers in video and Instagram, as I detailed yesterday. Beyond these factors, the company also has a number longer-term sources that hold a significant amount of potential. Specifically, Facebook's messaging apps, Facebook Messenger and WhatsApp, have an even greater number of users than Instagram and could unlock further growth beyond 2016. Additionally, Facebook's virtual reality company, Oculus, holds potential beyond PC and mobile as the next computing  platform.

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Detailing FB's Near-Term Revenue Drivers

The FB bull thesis is made up of a number of revenue drivers that could drive advertising revenue and EPS upside. In the near-term, investors see a number of positives that could benefit sales, including easing comparisons and FX headwinds. Beyond these superficial tailwinds, investors are most  bullish on the opportunities from video and Instagram, which are not fully baked into consensus estimates for next year.

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Apple 4Q15 Results Largely As Expected; 1Q16 Guidance Positive

Apple reported fiscal 4Q15 results after market close yesterday, and investors reacted positively (Apple is currently up +1% in the premarket). While the quarter's results were largely in line with investor expectations, investors were generally positive on Apple's 1Q16 guidance for positive iPhone revenue and unit growth. However, many investors remain concerned that growth could decline the rest of the year in fiscal 2016. A key question going forward will be whether Apple will be able to grow iPhone units and revenue in 2016 on top of the highly successful prior year.

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Chipotle's 4Q Guidance Disappoints Investors

Chipotle reported 3Q earnings after market close, and the pre-market is indicating an opening price down 8%. The company reported 3Q EPS of $4.59, which fell slightly short of consensus estimates of $4.62. Results were short largely due to lower-than-expected operating margins. However, the investor focus was primarily on management's commentary on sales trends.

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Lowe's Back-Half Guidance in Focus

Key Issue 1: Confidence in comp guidance for the back-half of the year

Key Issue 2: Confidence in margin guidance for the back-half of the year

Key Issue 3: Closing the HD/LOW Gap

Key Issue 4: Invest in HD or LOW?

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Home Depot's Debate Centers on Valuation

Home Depot is a widely admired company on Wall Street. Overall sentiment among Wall Street analysts is bullish, with the majority of analysts holding largely positive views on the stock. While there aren't many bears, there are analysts that believe the stock has run its course. Below are the key issues that these analysts are talking about.

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Amazon Surpasses Walmart; 2Q Exceeds Expectations

Back in mid-June, I wrote about Amazon's 38% stock increase on the heels of a strong 4Q and 1Q. Since then, AMZN reported blowout 2Q results, and the stock has increased another 34%, for a total of a 72% increase since January 29.  Amazon's market cap now stands at $250 billion, surpassing Walmart's $230 billion market cap. What has led Amazon to surpass the largest retailer in the world?

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The Risks to Bed Bath & Beyond's Online Sales Growth

Last week, I wrote about Bed Bath & Beyond's 1Q15 results and about some concerns surrounding the company's guidance for the year. Specifically, I wrote that Bed Bath & Beyond may miss its top-line guidance due to difficult comparisons. In response, some have noted that online sales should account for that 2-3% growth; if one breaks out comps by online vs. retail, the company would only need brick and mortar to break even, as it did last quarter, and for online to contribute another 2-3% to comps. 

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LOW Presents an Interesting Opportunity - If You Believe Management

While its sexier competitor Home Depot gets all the attention, LOW is an interesting play at current levels. Lowe's currently trades at a similar multiple to Home Depot despite having a stronger outlook on earnings. The key to the story is whether LOW will be able to achieve its guidance (set forth by management) for the year.

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Bed Bath & Beyond's 1Q15 Results Once Again Pressured

Bed Bath and Beyond reported 1Q15 results that were slightly below consensus expectations. Revenue once again grew at the low end of expectations and operating margin declined at a greater rate than expected. As I wrote in the past, Bed Bath & Beyond's bear thesis has largely played out as the company has suffered from increasing competition. Moving forward, it's difficult to see what might provide a boost to their top-line revenue or reverse the profitability declines. 

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What to Expect When BBBY Reports 1Q15 Results

BBBY reports 1Q15 results after market close on Wednesday, June 24th. Recall that I outlined the bear case in February, which has thus far largely played out. Here's what professional investors are expecting.

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Valuation - Why Multiples Are Used More Frequently Than DCFs

One of the most common questions that I get is why my models use multiples rather than a DCF for valuation. Personally, I believe a lot of people are too focused on DCFs. There's a common perception that professionals use complex DCFs with big finance terms while amateurs do third-grade math to get to a price target. It's not about which is more difficult or complex; it's about which method weighs the inputs appropriately given our certainty on the future of the company. 

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