Overall RH gets a fundamental rating of 4 out of 10. We evaluated RH against 122 industry peers in the Specialty Retail industry. There are concerns on the financial health of RH while its profitability can be described as average. RH has a correct valuation and a medium growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

RH had positive earnings in the past year.
RH had a positive operating cash flow in the past year.
RH had positive earnings in each of the past 5 years.
Each year in the past 5 years RH had a positive operating cash flow.

1.2 Ratios

The Return On Assets of RH (2.29%) is comparable to the rest of the industry.
RH has a better Return On Equity (3285.39%) than 100.00% of its industry peers.
Looking at the Return On Invested Capital, with a value of 8.26%, RH is in the better half of the industry, outperforming 68.59% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for RH is in line with the industry average of 12.24%.

		Industry Rank	Sector Rank
ROA	2.29%
ROE	3285.39%
ROIC	8.26%

ROA(3y)4.87%

ROA(5y)7.29%

ROE(3y)N/A

ROE(5y)N/A

ROIC(3y)10.73%

ROIC(5y)14.31%

1.3 Margins

RH has a better Profit Margin (3.22%) than 69.42% of its industry peers.
In the last couple of years the Profit Margin of RH has declined.
With an excellent Operating Margin value of 10.49%, RH belongs to the best of the industry, outperforming 84.30% of the companies in the same industry.
RH's Operating Margin has declined in the last couple of years.
The Gross Margin of RH (44.50%) is better than 71.07% of its industry peers.
RH's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	10.49%
PM (TTM)	3.22%
GM	44.5%

OM growth 3Y-26.37%

OM growth 5Y-6.4%

PM growth 3Y-50.1%

PM growth 5Y-22.84%

GM growth 3Y-3.41%

GM growth 5Y1.47%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

RH has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
Compared to 1 year ago, RH has more shares outstanding
RH has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, RH has an improved debt to assets ratio.

2.2 Solvency

RH has an Altman-Z score of 1.42. This is a bad value and indicates that RH is not financially healthy and even has some risk of bankruptcy.
The Altman-Z score of RH (1.42) is worse than 66.12% of its industry peers.
The Debt to FCF ratio of RH is 25.66, which is on the high side as it means it would take RH, 25.66 years of fcf income to pay off all of its debts.
RH has a Debt to FCF ratio (25.66) which is in line with its industry peers.
A Debt/Equity ratio of 944.39 is on the high side and indicates that RH has dependencies on debt financing.
The Debt to Equity ratio of RH (944.39) is worse than 80.99% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	944.39
Debt/FCF	25.66
Altman-Z	1.42

ROIC/WACC0.8

WACC10.31%

2.3 Liquidity

RH has a Current Ratio of 1.19. This is a normal value and indicates that RH is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of RH (1.19) is worse than 61.16% of its industry peers.
RH has a Quick Ratio of 1.19. This is a bad value and indicates that RH is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of RH (0.26) is worse than 80.17% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.19
Quick Ratio	0.26

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 41.43% over the past year.
The earnings per share for RH have been decreasing by -14.46% on average. This is quite bad
Looking at the last year, RH shows a quite strong growth in Revenue. The Revenue has grown by 9.74% in the last year.
The Revenue has been growing slightly by 3.74% on average over the past years.

EPS 1Y (TTM)41.43%

EPS 3Y-41.01%

EPS 5Y-14.46%

EPS Q2Q%-31.05%

Revenue 1Y (TTM)9.74%

Revenue growth 3Y-5.41%

Revenue growth 5Y3.74%

Sales Q2Q%8.88%

3.2 Future

Based on estimates for the next years, RH will show a very strong growth in Earnings Per Share. The EPS will grow by 45.55% on average per year.
The Revenue is expected to grow by 8.19% on average over the next years. This is quite good.

EPS Next Y36.4%

EPS Next 2Y41.7%

EPS Next 3Y39.79%

EPS Next 5Y45.55%

Revenue Next Year8.46%

Revenue Next 2Y8.69%

Revenue Next 3Y8.43%

Revenue Next 5Y8.19%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 35.97, RH can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of RH is on the same level as its industry peers.
RH's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 27.21.
With a Price/Forward Earnings ratio of 21.26, RH is valued on the expensive side.
61.98% of the companies in the same industry are more expensive than RH, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 25.98. RH is around the same levels.

		Industry Rank	Sector Rank
PE	35.97
Fwd PE	21.26

4.2 Price Multiples

The rest of the industry has a similar Enterprise Value to EBITDA ratio as RH.
The rest of the industry has a similar Price/Free Cash Flow ratio as RH.

		Industry Rank	Sector Rank
P/FCF	34.27
EV/EBITDA	14.89

4.3 Compensation for Growth

RH's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
RH has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as RH's earnings are expected to grow with 39.79% in the coming years.