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.

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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.
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's Return On Equity of 3285.39% is amongst the best of the industry. RH outperforms 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 12.19%.

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

The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so RH is still creating some value.
RH has more shares outstanding than it did 1 year ago.
The number of shares outstanding for RH has been reduced compared to 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 1.35. This is a bad value and indicates that RH is not financially healthy and even has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.35, RH is doing worse than 67.21% of the companies in the same industry.
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.
A Debt/Equity ratio of 944.39 is on the high side and indicates that RH has dependencies on debt financing.
RH has a worse Debt to Equity ratio (944.39) than 81.15% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	944.39
Debt/FCF	25.66
Altman-Z	1.35

ROIC/WACC0.8

WACC10.3%

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.
With a Current ratio value of 1.19, RH is not doing good in the industry: 61.48% of the companies in the same industry are doing better.
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

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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.
RH shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 9.74%.
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

The Earnings Per Share is expected to grow by 45.55% on average over the next years. This is a very strong growth
RH is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.19% yearly.

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

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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 31.31 indicates a quite expensive valuation of RH.
Based on the Price/Earnings ratio, RH is valued a bit cheaper than 62.30% of the companies in the same industry.
RH is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.32, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 18.51, which indicates a rather expensive current valuation of RH.
Compared to the rest of the industry, the Price/Forward Earnings ratio of RH indicates a somewhat cheap valuation: RH is cheaper than 63.93% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 25.57. RH is valued slightly cheaper when compared to this.

		Industry Rank	Sector Rank
PE	31.31
Fwd PE	18.51

4.2 Price Multiples

The rest of the industry has a similar Enterprise Value to EBITDA ratio as RH.
RH's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. RH is cheaper than 61.48% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	29.84
EV/EBITDA	13.78

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.
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.