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RH Class A RH

Morningstar Rating
$277.63 +3.23 (1.18%)
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Company Report

RH Profits Pressured Strangled by Housing Demand and Promotions, Which Should Prove Transitory

RH has gained share in the fragmented $143 billion (U.S. Census) domestic furniture and home furnishing market in recent years, curating differentiated offerings from specialized global artisans. The firm has broadened its brand awareness by expanding into underserved categories including modern, teen, and hospitality, where few peers nationally compete, leading to incremental market share gains from boutique competitors. Brand equity should remain stable given the pace of tailored store buildouts, category expansions, and pricing consistency, but the diverse end-market expansions RH is pursuing could make it tough to capture a cost advantage. Entry into international markets, the $200 billion hotel industry, and $1.7 trillion domestic housing market should help support 8% top line growth over the longer term.

Price vs Fair Value

RH is trading at a 12% discount.
Price
$277.63
Fair Value
$465.00
Uncertainty
Very High
1-Star Price
$311.93
5-Star Price
$269.70
Economic Moat
Xpt
Capital Allocation
Dzdlwrthnt

Bulls Say, Bears Say

Bulls

RH is continuing to transform its retail footprint in North America. As new product lines are introduced (couture and upholstery, for example) into an evolving footprint, sales to a broader addressable market could rise faster than we anticipate.

Bears

Low customer switching costs, along with the proliferation of e-commerce and mass-merchant competitors, could pressure operating margin expansion. High-end discounters could impact RH's market share.

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News

Trading Information

Previous Close Price
$274.40
Day Range
$271.97280.40
52-Week Range
$207.26406.38
Bid/Ask
$277.00 / $277.40
Market Cap
$5.06 Bil
Volume/Avg
393,409 / 682,641

Key Statistics

Price/Earnings (Normalized)
32.28
Price/Sales
2.09
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
38.88%

Company Profile

RH is a luxury retailer operating in the $143 billion domestic furniture and home furnishing industry. The firm offers merchandise across many categories including furniture, lighting, textiles, bath, decor, children, and is growing the presence of its hospitality business (with 15 restaurant locations). RH innovates, curates, and integrates products, categories, services, and businesses across channels and brand extensions (RH Teen, RH Modern, and Waterworks, for example). RH is fully integrated across store, Web, and catalog channels, and is positioned to broaden its total addressable market over the next decade with its World of RH digital platform (highlighting offerings outside of home furnishings), along with future offerings in color, bespoke furniture, architeture, media, and more.
Sector
Consumer Cyclical
Industry
Specialty Retail
Stock Style Box
Small Core
Total Number of Employees
6,180

Competitors

Valuation

Metric
RH
MC
WSM
Price/Earnings (Normalized)
32.2827.8715.62
Price/Book Value
6.938.37
Price/Sales
2.094.921.96
Price/Cash Flow
13.8218.4310.19
Price/Earnings
RH
MC
WSM

Financial Strength

Metric
RH
MC
WSM
Quick Ratio
0.520.580.46
Current Ratio
1.381.321.31
Interest Coverage
1.8123.09
Quick Ratio
RH
MC
WSM

Profitability

Metric
RH
MC
WSM
Return on Assets (Normalized)
4.12%11.43%22.55%
Return on Equity (Normalized)
44.75%27.46%65.22%
Return on Invested Capital (Normalized)
8.75%16.81%34.21%
Return on Assets
RH
MC
WSM
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Economic Moat
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GPC
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BBY
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WSM
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DKS
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BBWI
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