RH (RH) AI Stock Analysis

• Market Cap: $4.34B
• Dividend Yield: N/A
• Average Volume (3M): 1.05M
• Price to Earnings (P/E): 51.5
• Beta (1Y): 2.88
• Revenue Growth: 8.31%
• EPS Growth: 14.65%
• Country: US
• Employees: 5,690
• Sector: Consumer Cyclical
• Sector Strength: 70
• Industry: Specialty Retail
• EPS (TTM): 0.13
• Shares Outstanding: 18,732,450
• 10 Day Avg. Volume: 1,043,722
• 30 Day Avg. Volume: 1,052,822
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.80
• Enterprise Value/Revenue: 2.39
• Enterprise Value/Gross Profit: 5.37
• Enterprise Value/Ebitda: 16.81
• 1Y Price Target: $263.38
• Price Target Upside: 20.38% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

• Rating: 59 Neutral
• Price Target: $226.00 ▲(3.30% Upside)

RH's overall stock score reflects significant financial challenges, including high leverage and liquidity constraints, which are partially offset by strategic growth initiatives and positive earnings call sentiment. The high valuation and market conditions pose additional risks, but the company's proactive strategies in Europe and debt management provide some optimism.

Positive Factors

Financial Performance

A stabilization in demand trends and reaffirmed guidance provide better visibility into improving earnings and free cash flow.

Operational Efficiency

RH’s operating margin was above expectations due to lower SG&A expenses, indicating efficient cost management.

Revenue Growth

RH's performance is supported by ongoing new collection rollout and ramp of the European galleries, contributing to revenue growth.

Negative Factors

Demand Uncertainty

The trajectory of demand, possible margin pain, and high financial leverage remain tangible risks.

Financial Leverage

High financial leverage and excess inventory remain tangible risks for RH.

Market Challenges

Growth at RH is likely to slow without improvement in the housing market.

RH Business Overview & Revenue Model

Company Description

RH, formerly known as Restoration Hardware, is a luxury home furnishings company based in the United States. The company specializes in high-end furniture, lighting, textiles, and home décor products, offering a curated selection of items designed to enhance living spaces. RH operates through various channels, including retail galleries, an online platform, and a wholesale business, catering to both individual consumers and interior designers. The brand is known for its distinctive aesthetic and commitment to quality, often integrating art and design elements into its product offerings.

How the Company Makes Money

RH generates revenue primarily through the sale of its luxury home furnishings and décor products across its retail galleries and online platform. The company employs a membership model, offering customers exclusive access to products and services, which encourages higher spending among members. Key revenue streams include direct sales of furniture and accessories, as well as design services offered to clients. RH also benefits from partnerships with interior designers and architects, enhancing its visibility and sales within the luxury market. The company's focus on high-margin products and limited-edition collections contributes to its overall profitability.

RH Financial Statement Overview

Summary

The company's strong gross profit margin of 44.5% is overshadowed by declining EBIT and EBITDA margins, a negative trend in revenue growth, high leverage, and negative equity, indicating financial instability. Liquidity is a concern with operating cash flows below net income and negative free cash flow.

Income Statement

The company's TTM gross profit margin is strong at 44.5%, indicating effective cost management. However, both EBIT and EBITDA margins have declined over time, with the TTM EBIT margin at 9.9% and EBITDA margin at 14.2%. Net profit margin stands at a modest 2.6%. The revenue growth rate shows a negative trend, indicating a decrease in total revenue compared to previous years, which is concerning.

Balance Sheet

The company's balance sheet reveals significant leverage with a negative stockholders' equity, resulting in an undefined debt-to-equity ratio. The negative equity is a major concern, indicating potential financial instability. Despite this, the company maintains a reasonable total asset base, but the equity ratio is negative due to the negative equity.

Cash Flow

The operating cash flow to net income ratio is 0.6, indicating that operating cash flows are below net income, which could be a liquidity concern. The free cash flow is negative, reflecting high capital expenditures. However, the free cash flow to net income ratio is -2.0, suggesting challenges in converting net income into free cash flow.

Breakdown	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	3.18B	3.03B	3.59B	3.76B	2.85B
Gross Profit	1.41B	1.39B	1.81B	1.86B	1.33B
EBITDA	453.28M	523.59M	774.84M	1.07B	612.12M
Net Income	72.41M	127.56M	528.64M	688.55M	271.81M
Balance Sheet
Total Assets	4.55B	4.14B	5.31B	5.54B	2.90B
Cash, Cash Equivalents and Short-Term Investments	30.41M	123.69M	1.51B	2.18B	100.45M
Total Debt	3.94B	3.72B	3.63B	3.38B	1.58B
Total Liabilities	4.72B	4.44B	4.52B	4.37B	2.45B
Stockholders Equity	-163.59M	-297.39M	784.66M	1.17B	447.03M
Cash Flow
Free Cash Flow	-213.69M	-67.14M	230.04M	476.73M	389.64M
Operating Cash Flow	17.09M	202.21M	403.69M	662.11M	500.77M
Investing Cash Flow	-240.41M	-307.43M	-171.07M	-194.35M	-197.60M
Financing Cash Flow	130.59M	-1.28B	-902.48M	1.61B	-243.91M

RH Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 218.79
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 218.79 is below the 20-day moving average (MA) of 219.82, above the 50-day MA of 205.35, and below the 200-day MA of 276.43, indicating a neutral trend. The MACD of 6.15 indicates Positive momentum. The RSI at 51.01 is Neutral, neither overbought nor oversold. The STOCH value of 31.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RH.

RH Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WSM	78 Outperform	$24.93B	22.94	51.10%	1.23%	1.64%	8.57%
FIVE	77 Outperform	$7.79B	29.20	15.30%	―	10.71%	-10.36%
ASO	71 Outperform	$3.50B	9.69	20.14%	0.94%	-3.57%	-17.43%
ETSY	65 Neutral	$6.29B	51.95	-39.97%	―	2.38%	-38.88%
Sector *	61 Neutral	$17.42B	12.39	-5.32%	3.12%	1.53%	-15.37%
RH	59 Neutral	$4.34B	51.49	-38.18%	―	8.31%	14.65%
W	57 Neutral	$10.24B	―	17.86%	―	0.87%	54.67%

RH Corporate Events

RH Extends Credit Agreement Maturity by Four Years

On July 31, 2025, Restoration Hardware, Inc. amended its Credit Agreement to extend the maturity date by four years, maintaining a revolving line of credit up to $600 million, with potential expansion to $900 million. This amendment impacts RH‘s financial operations by providing flexibility and potential growth opportunities, although it includes various covenants and restrictions typical of such agreements.

RH Shareholders Approve Key Proposals at Annual Meeting

At the annual meeting held on June 26, 2025, RH shareholders voted on three key proposals. They elected three Class I directors to the Board, approved executive compensation on a non-binding advisory basis, and ratified the appointment of PricewaterhouseCoopers LLP as the independent accounting firm for the fiscal year ending January 31, 2026. These decisions are expected to influence RH’s governance and financial oversight, potentially impacting its strategic direction and stakeholder confidence.

RH Appoints Lisa Chi as Co-Chief Officer

On May 20, 2025, RH announced the appointment of Lisa Chi as President, Co-Chief Merchandising & Creative Officer. Ms. Chi, who previously held senior roles at RH and Arhaus, will co-lead various functions alongside Eri Chaya. Her return is seen as a strategic move to enhance RH’s product and platform expansion. The company emphasizes its transparent sourcing practices compared to other furniture retailers, suggesting that it faces no greater market or financial risks.