RH (RH) AI Stock Analysis

Compare

2,051 Followers

Top Page

RH

(NYSE:RH)

Select Model

Neutral 53 (OpenAI - 4o)

Rating:53Neutral

Price Target:

$234.00

▲(1.43% Upside)

RH's overall stock score reflects a challenging financial position with high leverage and negative equity, which is the most significant concern. The earnings call provided positive insights into growth and expansion, which partially offsets the financial risks. Technical analysis and valuation suggest moderate potential, but the high P/E ratio indicates overvaluation. The company's strategic initiatives and international expansion are promising, but tariff challenges and financial instability remain key risks.

Positive Factors

International Expansion

Successful international expansion, such as the launch in Paris, enhances RH's global footprint and market reach, supporting long-term growth.

Revenue and Demand Growth

Consistent revenue and demand growth indicate strong market presence and product appeal, which are crucial for sustaining long-term business success.

Improved Margins

Improved operating margins reflect enhanced operational efficiency and cost management, contributing to sustainable profitability.

Negative Factors

High Financial Leverage

High financial leverage and negative equity can lead to financial instability, limiting the company's ability to invest in growth and weather downturns.

Tariff Challenges

Tariff challenges increase costs and create uncertainty, potentially impacting profitability and strategic planning in the long term.

Cash Flow Issues

Declining free cash flow indicates difficulties in converting income into cash, which can constrain operational flexibility and growth initiatives.

RH (RH) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$4.18B

Dividend YieldN/A

Average Volume (3M)1.23M

Price to Earnings (P/E)41.4

Beta (1Y)2.78

Revenue Growth9.56%

EPS Growth205.41%

CountryUS

Employees5,690

SectorConsumer Cyclical

Sector Strength84

IndustrySpecialty Retail

Share Statistics

EPS (TTM)2.93

Shares Outstanding18,745,070

10 Day Avg. Volume1,489,428

30 Day Avg. Volume1,231,717

Financial Highlights & Ratios

PEG Ratio-2.75

Price to Book (P/B)-47.36

Price to Sales (P/S)2.44

P/FCF Ratio-36.26

Enterprise Value/Market Cap1.88

Enterprise Value/Revenue2.35

Enterprise Value/Gross Profit5.27

Enterprise Value/Ebitda16.92

Forecast

1Y Price Target

$265.58

Price Target Upside15.12% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering14

RH Business Overview & Revenue Model

Company DescriptionRH, together with its subsidiaries, operates as a retailer in the home furnishings. It offers products in various categories, including furniture, lighting, textiles, bathware, decor, outdoor and garden, and child and teen furnishings. The company provides its products through its retail galleries; and Source Books, a series of catalogs, as well as online through rh.com, rhbabyandchild.com, rhteen.com, and rhmodern.com, as well as waterworks.com. As of January 29, 2022, it operated a total of 67 RH Galleries and 38 RH outlet stores in 30 states in the District of Columbia and Canada, as well as 14 Waterworks showrooms throughout the United States and the United Kingdom. The company was formerly known as Restoration Hardware Holdings, Inc. and changed its name to RH in January 2017. RH was incorporated in 2011 and is headquartered in Corte Madera, California.

How the Company Makes MoneyRH 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 Key Performance Indicators (KPIs)

Any

Store Count

Store Count
Indicates the total number of retail locations, providing insight into the company’s market presence and expansion strategy.

Chart InsightsRH's store count has shown a slight increase, reflecting strategic expansion efforts despite a challenging housing market. The recent earnings call highlights strong international demand, particularly in Europe, and plans for new design galleries, which align with this growth. However, the company faces risks from tariff disruptions and debt burdens, which could impact future expansion and profitability. The focus on reducing reliance on China and increasing U.S. production may mitigate some risks, supporting their long-term growth strategy.

Data provided by:

Main Street Data

RH Earnings Call Summary

Earnings Call Date:Sep 11, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Dec 04, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a company experiencing strong growth and successful international expansions but facing significant challenges due to ongoing and potential new tariffs. While the growth metrics and achievements in Europe are positive, the uncertainties and financial impacts of tariffs present clear challenges.

Q2-2025 Updates

Positive Updates

Revenue and Demand Growth

Revenue increased by 8.4% and demand increased by 13.7% year-over-year, despite challenges such as tariff uncertainty and a weak housing market.

Net Income and Cash Flow

Net income increased by 79%, and the company generated $81 million of free cash flow in the quarter.

European Expansion Success

RH England saw gallery demand up 76% and online demand up 34%. RH Paris launched successfully with strong initial traffic and design pipeline exceeding expectations.

Adjusted Operating Margin and EBITDA

Adjusted operating margin increased to 15.1% and adjusted EBITDA to 20.6%, both up 340 basis points from last year.

Negative Updates

Tariff Challenges

The announcement of new furniture tariff investigations presents uncertainty, and RH is facing a $30 million cost due to incremental tariffs in the second half of the year.

Delay in Product Launches

Due to tariff uncertainties, the launch of a new brand extension was delayed to Spring 2026, and the Fall Interiors Sourcebook was delayed by 8 weeks.

Reduced Guidance Due to Tariffs

The company revised its fiscal 2025 guidance downward due to tariff-related dislocations, causing expected revenue shifts between quarters.

Company Guidance

In the RH second quarter fiscal 2025 earnings call, the company reported an 8.4% revenue increase and a 13.7% demand increase, highlighting strategic separation despite tariff challenges and a challenging housing market. On a two-year basis, revenue grew by 12% with demand rising by 21%. The adjusted operating margin improved by 340 basis points to 15.1%, while adjusted EBITDA increased to 20.6%, with a 170 basis point impact from European expansion investments. Net income surged by 79%, and free cash flow reached $81 million. RH Paris recently opened, attracting significant traffic and surpassing expectations. The company plans to continue expanding globally, projecting a revenue growth of 9% to 11% for fiscal 2025, with an adjusted operating margin of 13% to 14% and free cash flow between $250 million and $300 million, despite ongoing tariff uncertainties and strategic delays.

RH Financial Statement Overview

Summary

RH maintains strong gross margins but faces significant challenges with declining revenue and high leverage. The negative equity is a major financial risk, and cash flow issues indicate liquidity constraints. Improvement in revenue growth and debt management is crucial for long-term stability.

Income Statement

Neutral

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

Negative

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

Negative

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	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.34B	3.18B	3.03B	3.59B	3.76B	2.85B
Gross Profit	1.49B	1.41B	1.39B	1.81B	1.86B	1.33B
EBITDA	463.25M	453.28M	523.59M	774.84M	1.07B	612.12M
Net Income	106.83M	72.41M	127.56M	528.64M	688.55M	271.81M
Balance Sheet
Total Assets	4.70B	4.55B	4.14B	5.31B	5.54B	2.90B
Cash, Cash Equivalents and Short-Term Investments	34.56M	30.41M	123.69M	1.51B	2.18B	100.45M
Total Debt	1.25B	3.94B	3.72B	3.63B	3.38B	1.58B
Total Liabilities	4.74B	4.72B	4.44B	4.52B	4.37B	2.45B
Stockholders Equity	-40.90M	-163.59M	-297.39M	784.66M	1.17B	447.03M
Cash Flow
Free Cash Flow	-50.91M	-213.69M	-67.14M	230.04M	476.73M	389.64M
Operating Cash Flow	174.11M	17.09M	202.21M	403.69M	662.11M	500.77M
Investing Cash Flow	-249.79M	-240.41M	-307.43M	-171.07M	-194.35M	-197.60M
Financing Cash Flow	118.72M	130.59M	-1.28B	-902.48M	1.61B	-243.91M

RH Technical Analysis

Technical Analysis Sentiment

Positive

Last Price230.70

Price Trends

50DMA

218.85

Positive

100DMA

205.00

Positive

200DMA

267.55

Negative

Market Momentum

MACD

2.25

Positive

RSI

52.49

Neutral

STOCH

20.91

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RH, the sentiment is Positive. The current price of 230.7 is above the 20-day moving average (MA) of 228.84, above the 50-day MA of 218.85, and below the 200-day MA of 267.55, indicating a neutral trend. The MACD of 2.25 indicates Positive momentum. The RSI at 52.49 is Neutral, neither overbought nor oversold. The STOCH value of 20.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RH.

RH Risk Analysis

RH disclosed 35 risk factors in its most recent earnings report. RH reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

RH Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WSM	76 Outperform	24.49B	22.10	51.76%	1.22%	3.28%	9.29%
ASO	72 Outperform	3.10B	8.71	17.87%	1.08%	-2.20%	-17.95%
BBWI	63 Neutral	5.46B	7.87	-47.03%	3.02%	-0.18%	-18.95%
ETSY	59 Neutral	5.73B	46.23	-14.58%	―	2.38%	-38.88%
W	57 Neutral	11.38B	-36.57	17.86%	―	0.87%	54.67%
RH	53 Neutral	$4.18B	41.45	-38.18%	―	9.56%	205.41%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

* Consumer Cyclical Sector Average

Performance Comparison

230.70

-103.98

-31.07%

BBWI

Bath & Body Works

26.02

-2.93

-10.12%

WSM

Williams-Sonoma

196.06

50.79

34.96%

Wayfair

87.24

36.49

71.90%

ETSY

Etsy

59.41

5.41

10.02%

ASO

Academy Sports and Outdoors

46.36

-15.64

-25.23%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Sep 17, 2025