RH gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 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 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

In the past year RH was profitable.
RH had a positive operating cash flow in the past year.
Each year in the past 5 years RH has been profitable.
RH had a positive operating cash flow in each of the past 5 years.

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 68.85% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years 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

The Profit Margin of RH (3.22%) is better than 69.67% of its industry peers.
RH's Profit Margin has declined in the last couple of years.
RH's Operating Margin of 10.49% is amongst the best of the industry. RH outperforms 84.43% of its industry peers.
In the last couple of years the Operating Margin of RH has declined.
The Gross Margin of RH (44.50%) is better than 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%

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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.
The debt/assets ratio for RH has been reduced compared to a year ago.

2.2 Solvency

Based on the Altman-Z score of 1.40, we must say that RH is in the distress zone and has some risk of bankruptcy.
The Altman-Z score of RH (1.40) is worse than 65.57% 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.
The Debt to FCF ratio of RH (25.66) is comparable to the rest of the industry.
RH has a Debt/Equity ratio of 944.39. This is a high value indicating a heavy dependency on external financing.
RH has a Debt to Equity ratio of 944.39. This is amonst the worse of the industry: RH underperforms 81.15% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	944.39
Debt/FCF	25.66
Altman-Z	1.4

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's Current ratio of 1.19 is on the low side compared to the rest of the industry. RH is outperformed by 61.48% of its industry peers.
A Quick Ratio of 0.26 indicates that RH may have some problems paying its short term obligations.
RH has a Quick ratio of 0.26. This is amonst the worse of the industry: RH underperforms 80.33% 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

RH shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 41.43%, which is quite impressive.
Measured over the past years, RH shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -14.46% on average per year.
The Revenue has grown by 9.74% in the past year. This is quite good.
Measured over the past years, RH shows a small growth in Revenue. The Revenue has been growing by 3.74% on average per year.

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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 34.50 indicates a quite expensive valuation of RH.
The rest of the industry has a similar Price/Earnings ratio as RH.
When comparing the Price/Earnings ratio of RH to the average of the S&P500 Index (27.25), we can say RH is valued slightly more expensively.
RH is valuated rather expensively with a Price/Forward Earnings ratio of 20.40.
Compared to the rest of the industry, the Price/Forward Earnings ratio of RH indicates a somewhat cheap valuation: RH is cheaper than 63.11% of the companies listed in the same industry.
RH is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 25.98, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	34.5
Fwd PE	20.4

4.2 Price Multiples

RH's Enterprise Value to EBITDA ratio is in line with the industry average.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of RH is on the same level as its industry peers.

		Industry Rank	Sector Rank
P/FCF	32.88
EV/EBITDA	14.54

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of RH 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.