We assign a fundamental rating of 4 out of 10 to RH. RH was compared to 122 industry peers in the Specialty Retail industry. RH has a medium profitability rating, but doesn't score so well on its financial health evaluation. RH is not valued too expensively and it also shows a decent growth rate.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

RH had positive earnings in the past year.
In the past year RH had a positive cash flow from operations.
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

RH's Return On Assets of 2.29% is in line compared to the rest of the industry. RH outperforms 56.56% of its industry peers.
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 68.85% of the companies in the same industry.
RH had an Average Return On Invested Capital over the past 3 years of 10.73%. This 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

Looking at the Profit Margin, with a value of 3.22%, RH is in the better half of the industry, outperforming 69.67% of the companies in the same industry.
RH's Profit Margin has declined in the last couple of years.
RH has a better Operating Margin (10.49%) than 84.43% of its industry peers.
RH's Operating Margin has declined in the last couple of years.
RH has a Gross Margin of 44.50%. This is in the better half of the industry: RH outperforms 70.49% 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%

More info and screens

ROA

ROE

ROIC

Operating and Profit Margin

Show most profitable peers

2. Health

2.1 Basic Checks

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

2.2 Solvency

Based on the Altman-Z score of 1.37, we must say that RH is in the distress zone and has some risk of bankruptcy.
RH has a worse Altman-Z score (1.37) than 65.57% of its industry peers.
RH has a debt to FCF ratio of 25.66. This is a negative value and a sign of low solvency as RH would need 25.66 years to pay back of all of its debts.
With a Debt to FCF ratio value of 25.66, RH perfoms like the industry average, outperforming 46.72% of the companies in the same industry.
RH has a Debt/Equity ratio of 944.39. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 944.39, RH is doing worse than 81.15% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	944.39
Debt/FCF	25.66
Altman-Z	1.37

ROIC/WACC0.8

WACC10.28%

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.
RH has a worse Current ratio (1.19) than 61.48% of its industry peers.
A Quick Ratio of 0.26 indicates that RH may have some problems paying its short term obligations.
With a Quick ratio value of 0.26, RH is not doing good in the industry: 80.33% of the companies in the same industry are doing better.

		Industry Rank	Sector Rank
Current Ratio	1.19
Quick Ratio	0.26

More info and screens

WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

Show peers with great health

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 41.43% over the past year.
RH shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -14.46% yearly.
Looking at the last year, RH shows a quite strong growth in Revenue. The Revenue has grown by 9.74% in the last year.
RH shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.74% yearly.

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

RH is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 45.55% yearly.
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.

More info and screens

Find the best growth stocks

Show best growing peers

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 33.04, which means the current valuation is very expensive for RH.
Compared to the rest of the industry, the Price/Earnings ratio of RH is on the same level as its industry peers.
RH is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.87, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 19.53, which indicates a rather expensive current valuation of RH.
Based on the Price/Forward Earnings ratio, RH is valued a bit cheaper than 65.57% of the companies in the same industry.
RH's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.96.

		Industry Rank	Sector Rank
PE	33.04
Fwd PE	19.53

4.2 Price Multiples

RH's Enterprise Value to EBITDA is on the same level as the industry average.
RH's Price/Free Cash Flow is on the same level as the industry average.

		Industry Rank	Sector Rank
P/FCF	31.48
EV/EBITDA	14.19

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.
RH's earnings are expected to grow with 39.79% in the coming years. This may justify a more expensive valuation.