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Rh (RH)
:RH
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RH
(NYSE:RH)47Neutral
Positive Factors
Demand Growth
RH is outperforming expectations, and if the current accelerating pace of demand growth continues, there is potential for both EBITDA and valuation upside.
New Collection Launches
New collection launches are resonating with customers, as RH generates its own demand with a stepped-up cadence of product innovation and sourcebook mailings.
Negative Factors
Margin Outlook
Ongoing investments and prioritizing volume over margins could create a lumpy margin outlook in the medium term.
RH (RH) vs. S&P 500 (SPY)
Market Cap
$5.23B
Dividend YieldN/A
Average Volume (3M)673.07K
Price to Earnings (P/E)75.3
Beta (1Y)2.49
Revenue Growth1.41%
EPS Growth-62.21%
CountryUS
Employees5,960
SectorConsumer Cyclical
Sector Strength53
IndustryRetail - Discretionary
Share Statistics
EPS (TTM)3.48
Shares Outstanding18,602,848
10 Day Avg. Volume911,946
30 Day Avg. Volume673,071
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.68
Price to Cash Flow (P/CF)-41.60
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$479.57Price Target Upside82.74% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
RH Business Overview & Revenue Model
Company DescriptionRH (Restoration Hardware) is a luxury home furnishings retailer offering a wide range of high-quality products, including furniture, lighting, textiles, and decor. Known for its distinctive aesthetic and design-forward approach, RH operates across several sectors, including retail, hospitality, and interior design. The company provides its products through its chain of galleries, outlets, and an e-commerce platform, targeting high-end consumers seeking premium home furnishings.
How the Company Makes MoneyRH makes money primarily through the sale of luxury home furnishings and decor products. Its revenue streams include retail sales from its galleries and outlets, as well as online sales through its e-commerce platform. The company also generates income from membership programs, which offer members exclusive discounts and benefits. Additionally, RH engages in strategic partnerships and collaborations with designers and artists to enhance its product offerings, further contributing to its earnings. The company's focus on high-quality, design-driven products allows it to maintain premium pricing, boosting its profit margins.
RH Financial Statement Overview
Summary
RH's financial performance is weak, with declining revenue, shrinking profit margins, high leverage, and negative cash flow metrics. The negative equity and cash flow challenges suggest financial instability and potential distress.Income Statement
RH's income statement shows challenges in maintaining profitability with a declining net profit margin from 2.3% in 2022 to 2.25% in TTM (Trailing-Twelve-Months). Revenue growth is negative over the TTM period, with a drop from the previous year. The gross profit margin has also decreased, impacting overall profitability. These trends indicate pressure on margins and declining sales.45
Neutral
Balance Sheet
The balance sheet indicates a concerning financial position with a negative stockholders' equity, resulting in a negative equity ratio. The debt-to-equity ratio is effectively irrelevant due to negative equity, highlighting significant leverage risks. The ROE is not applicable, but high debt levels pose potential financial strain.30
Negative
Cash Flow
The cash flow statement reveals negative free cash flow growth with substantial declines in operating cash flow and free cash flow over the TTM period. The operating cash flow to net income ratio is negative, indicating operational challenges. The free cash flow to net income ratio is also negative, suggesting insufficient cash generation relative to earnings.40
Negative
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.11B | 3.03B | 3.59B | 3.76B | 2.85B | 2.65B | Gross Profit |
| 1.37B | 1.39B | 1.81B | 1.86B | 1.33B | 1.10B | EBIT |
| 324.63M | 366.07M | 722.16M | 927.18M | 466.86M | 362.83M | EBITDA |
| 424.02M | 523.59M | 774.84M | 1.07B | 612.12M | 470.04M | Net Income Common Stockholders |
| 69.88M | 127.56M | 528.64M | 688.55M | 271.81M | 220.38M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 87.01M | 123.69M | 1.51B | 2.18B | 100.45M | 47.66M | Total Assets |
| 4.46B | 4.14B | 5.31B | 5.54B | 2.90B | 2.45B | Total Debt |
| 1.15B | 3.72B | 3.63B | 3.38B | 1.58B | 1.77B | Net Debt |
| 1.06B | 3.59B | 2.11B | 1.21B | 1.48B | 1.72B | Total Liabilities |
| 4.65B | 4.44B | 4.52B | 4.37B | 2.45B | 2.43B | Stockholders Equity |
| -183.01M | -297.39M | 784.66M | 1.17B | 447.03M | 18.65M |
| Cash Flow | Free Cash Flow | ||||
| -395.50M | -67.14M | 230.04M | 476.73M | 389.64M | 245.56M | Operating Cash Flow |
| -78.09M | 202.21M | 403.69M | 662.11M | 500.77M | 339.19M | Investing Cash Flow |
| -330.79M | -307.43M | -171.07M | -194.35M | -197.60M | -122.55M | Financing Cash Flow |
| 112.11M | -1.28B | -902.48M | 1.61B | -243.91M | -174.80M |
RH Technical Analysis
Negative
262.43
Price Trends
388.36
Negative
371.49
Negative
322.42
Negative
Market Momentum
-32.32
Positive
19.36
Positive
9.45
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RH, the sentiment is Negative. The current price of 262.43 is below the 20-day moving average (MA) of 346.38, below the 50-day MA of 388.36, and below the 200-day MA of 322.42, indicating a bearish trend. The MACD of -32.32 indicates Positive momentum. The RSI at 19.36 is Positive, neither overbought nor oversold. The STOCH value of 9.45 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RH.
RH Risk Analysis
RH disclosed 35 risk factors in its most recent earnings report. RH reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
RH Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $1.74B | 14.44 | 12.40% | 1.97% | 1.81% | 8.09% | |
74 Outperform | $22.46B | 21.58 | 58.86% | 1.25% | -5.00% | 17.77% | |
67 Neutral | $702.88M | 11.58 | 12.86% | 5.64% | -11.10% | -23.77% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
58 Neutral | $359.95M | 18.39 | 6.48% | 5.74% | -19.60% | -60.94% | |
56 Neutral | $138.33M | ― | -5.53% | 4.96% | -15.43% | -202.84% | |
47 Neutral | $5.23B | 75.32 | -38.18% | ― | 1.41% | -62.21% |
* Consumer Cyclical Sector Average
Performance Comparison
RH
RH
262.43
-19.39
-6.88%
BSET
Bassett Furniture
15.45
0.94
6.48%
ETD
Ethan Allen
27.88
-2.72
-8.89%
HVT
Haverty
21.82
-8.92
-29.02%
LZB
La-Z-Boy Incorporated
41.67
5.72
15.91%
WSM
Williams-Sonoma
188.41
71.96
61.79%
RH Earnings Call Summary
Earnings Call Date: Dec 12, 2024 | % Change Since: -31.19% | Next Earnings Date: Mar 26, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with significant international expansion and product transformation efforts being offset by challenges in the housing market and margin pressures. While there are positive long-term strategic initiatives, current market conditions are creating headwinds.Highlights
International Expansion Success
RH expanded internationally with the opening of RH England, RH Munich, and RH Düsseldorf, receiving positive feedback and strong attendance at launch events. Future openings planned for Brussels, Madrid, and Paris.
Opportunistic Real Estate Investment
RH is purchasing the New York Guest House property for $58 million, below its $85 million appraised value, with plans for a future sale-leaseback when the market rebounds.
Product Transformation
RH is undergoing its largest product transformation with new collections such as RH Interiors, RH Contemporary, and upcoming RH Modern and RH Outdoor Source Books.
Long-term Growth Strategy
RH is pursuing a multi-billion dollar opportunity by expanding globally, transforming North American galleries, and developing new products and services.
Lowlights
Challenging Housing Market
The housing market is facing significant headwinds with high mortgage rates, impacting demand. 82% of homeowners have mortgages below 5%, creating a 'frozen' market.
Operating Margin Pressures
Adjusted operating margin of 7.3% was slightly below expectations due to higher-than-anticipated expenses related to international openings and the acquisition of the New York Guest House.
Promotional Market Environment
The home furnishings market has become increasingly promotional, impacting RH's gross margins and necessitating a delay in the Modern Source Book launch.
Company Guidance
In the Q3 2024 earnings call for RH, the company reported net revenues of $751 million, achieving the midpoint of their guidance, while adjusted operating margin was slightly below expectations at 7.3% due to higher expenses from international openings and acquisition efforts. The company expects revenues for the year to range from $3.06 billion to $3.08 billion, with adjusted operating margins between 13.6% and 14%. RH highlighted headwinds from rising mortgage rates and geopolitical tensions impacting demand, but expressed optimism about future growth driven by new product launches and global expansion, including new galleries in Munich and Dusseldorf. The company's strategic focus includes transformative product collections, with expectations of demand acceleration through the first half of 2024, aiming to reach an inflection point in Q2. RH's long-term vision also involves expanding the brand globally, with upcoming openings planned in Brussels, Madrid, and Paris, integrating hospitality services to enhance the brand experience.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.