The shares of Mattress Firm Holding Corp (NASDAQ:MFRM) are trading 21.50% lower today after its worse-than-expected quarterly results were announced this morning. On the other hand, Restoration Hardware Holdings Inc (NYSE:RH) is enjoying a positive day, with gains of 7.46% thanks to its strong second quarter results. Let’s analyze these quarterly results and the hedge fund sentiment surrounding these stocks and try to determine if they make for good buys or not.
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We’ll start with Mattress Firm Holding Corp (NASDAQ:MFRM), which reported net sales of $661.1 million for its fiscal second quarter of 2016, ended on August 4, which signalled year-over-year growth of 61.2%. Its non-GAAP adjusted earnings came out to $0.67 per share against prior-year EPS of $0.61. Despite the solid year-over-year growth in its revenue and EPS, Mattress Firm Holding Corp (NASDAQ:MFRM) didn’t match the market’s revenue expectations of $663.58 million, while its earnings came in $0.05 lower than analysts’ consensus estimate of $0.72 per share. The comparable store sales growth of Mattress Firm Holding Corp grew by 2.8% compared to the same quarter of the previous fiscal year. The mattress company released annual revenue guidance of $2.53 billion-to-$2.55 billion for fiscal year 2016 along with adjusted EPS of $2.30-to-$2.45.
The stock of Mattress Firm Holding Corp (NASDAQ:MFRM) has received a consensus rating of ‘Buy’ from brokerage firms that monitor it, along with a price target of $70.30. The smart money we track was bullish on the stock as well, with aggregate hedge fund ownership totaling 27.20% of the outstanding shares of the company. However, the number of hedge funds holding positions in the company was down by six during the second quarter, to ten, while the aggregate holdings declined by 7.30% to $583.02 million. It is important to consider that the shares of Mattress Firm Holding Corp (NASDAQ:MFRM) were down by 12.48% during the second quarter, having a negative impact on the total holdings. Among the hedge funds we track at Insider Monkey, 40 North Management, led by David S. Winter and David J. Millstone, was the largest shareholder of the company, having 2.59 million shares in its equity portfolio. Alan Fournier‘s Pennant Capital Management, along with Stockbridge Partners held considerable stakes in the company as well, of 2.56 million shares and 2.35 million shares, respectively.
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Moving on to Restoration Hardware Holdings Inc (NYSE:RH), the firm surpassed Wall Street’s revenue estimates with reported revenues of $506.9 million for its fiscal second quarter, ended on August 1, against estimates of $503 million, posting 17% year-over-year (YOY) growth. Its earnings per share of $0.85 beat the market expectations by $0.01 and amounted to 27% YOY growth. On the back of its strong second quarter results, the company’s management upgraded its revenue estimates for fiscal year 2015 to lie between $2.16 billion and $2.18 billion, compared to previous guidance of between $2.15 billion and $2.18 billion. Restoration Hardware Holdings Inc (NYSE:RH) increased it EPS guidance for fiscal 2015 to lie between $3.06 and $3.16 in comparison with previous EPS guidance of $3.02 to $3.15.
On top of these quarterly results, Restoration Hardware announced the launch of multiple business units, starting in September with the launch of RH Modern and RH Teen, along with its individual source book, website, and retail presence. RH Teen will include modern furniture options suited for the taste of teenagers. The company is planning the launch of four next generation Design Galleries in Chicago, Denver, Tampa, and Austin, followed by RH Modern in Los Angeles, among other new units. Restoration Hardware Holdings Inc (NYSE:RH) will launch these new business in the third and fourth quarter of 2015. The company is expecting higher growth figures fueled by these launches in fiscal year 2016.
The hedge funds that we track at Insider Monkey held 23.40% of the available common shares of Restoration Hardware Holdings Inc (NYSE:RH) at the end of the second quarter, indicating huge interest in the company. The number of hedge funds holding positions was up by six to 41 hedgies, having aggregate holdings worth $914.26 million. The aggregate holdings declined by 4.80%, while the shares of Restoration Hardware dropped by 1.57% during the second quarter. Tiger Global Management LLC, led by Chase Coleman, and Miura Global Management, led by Richard Tumure and Pasco Alfaro, held large stakes in Restoration Hardware Holdings Inc (NYSE:RH) of 3.19 million shares and 1.12 million shares, respectively.
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