Soho House & Co (SHCO) AI Stock Analysis

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Soho House & Co

(NYSE:SHCO)

50Neutral

Soho House & Co shows strong revenue growth and membership increases, but it struggles with profitability and has a high debt burden. The stock's technical indicators suggest a neutral market sentiment, while valuation metrics highlight financial challenges due to ongoing losses and lack of dividends. Adjusted earnings guidance and external factors such as natural disasters add to the cautionary outlook.

Positive Factors

Cost Management

Management's initiatives around cost savings and member engagement are benefiting in-house spending per member.

Membership Growth

Recent openings in locations like Sao Paulo, Mexico City, and Portland show positive trends in membership growth.

Negative Factors

Leverage Risk

SHCO's lease-adjusted debt is 5.8x 2024 EBITDAR, significantly higher than the average of 3.5x.

Soho House & Co (SHCO) vs. S&P 500 (SPY)

Market Cap

$988.04M

Dividend YieldN/A

Average Volume (3M)482.75K

Price to Earnings (P/E)―

Beta (1Y)1.08

Revenue Growth6.28%

EPS Growth-45.76%

CountryUS

Employees7,852

SectorConsumer Cyclical

Sector Strength55

IndustryTravel Lodging

Share Statistics

EPS (TTM)-0.88

Shares Outstanding52,996,502

10 Day Avg. Volume431,422

30 Day Avg. Volume482,750

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)1.15

Price to Cash Flow (P/CF)19.30

P/FCF Ratio19.30

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$9.00

Price Target Upside81.45% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Soho House & Co Business Overview & Revenue Model

Company DescriptionSoho House & Co Inc. operates a global membership platform of physical and digital spaces that connects a group of members. These members use the platform to work, socialize, connect, create, and flourish all over the world. The company was formerly known as Membership Collective Group Inc. and changed its name to Soho House & Co Inc. in March 2023. Soho House & Co Inc. was founded in 1995 and is headquartered in New York, New York.

How the Company Makes MoneySoho House & Co generates revenue primarily through membership fees paid by its exclusive community of members. These fees provide access to the clubs and their amenities. Additionally, the company earns money from its hospitality services, which include dining and accommodation at its properties. Soho House also leverages its brand by offering a range of retail products, such as home and lifestyle items. Significant partnerships with brands and events also contribute to its revenue streams, enhancing its offerings and attracting a diverse membership base.

Soho House & Co Financial Statement Overview

Summary

Soho House & Co demonstrates mixed financial performance. Revenue growth is promising but overshadowed by profitability issues. High debt levels and negative equity highlight financial risks. Operating cash flow is improving, but negative free cash flow suggests ongoing cash management challenges.

Income Statement

Neutral

Soho House & Co has shown positive revenue growth over the years, with TTM (Trailing-Twelve-Months) revenue increasing by approximately 5% compared to the previous year. However, the company continues to face challenges with profitability, evidenced by negative net profit and EBIT margins. The gross profit margin stands at around 41.3% TTM, indicating a substantial cost structure. Despite revenue growth, the company struggles with operational efficiency, reflected in negative EBITDA and EBIT margins.

Balance Sheet

Negative

The balance sheet shows a concerning financial structure with a high debt level leading to a negative stockholders' equity, resulting in an undefined debt-to-equity ratio. The company's liabilities exceed its assets, marking significant financial risk. Return on Equity (ROE) is not calculable due to negative equity, highlighting a critical area of concern. The equity ratio is negative, reflecting the potential risk of insolvency.

Cash Flow

Neutral

Soho House & Co has improved its operating cash flow in the TTM compared to previous years, with a significant increase from the annual report. However, free cash flow remains negative due to high capital expenditures. The operating cash flow to net income ratio is positive, indicating better cash generation relative to earnings, though free cash flow to net income remains negative, signaling cash flow challenges.

TTM	Dec 2023	Mar 2023	Mar 2022	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
1.19B	1.14B	972.21M	560.55M	384.38M	642.03M
	Gross Profit
492.88M	546.52M	447.29M	251.71M	164.34M	60.46M
	EBIT
-10.49M	-23.00M	-147.48M	-188.03M	-154.73M	-38.49M
	EBITDA
92.03M	85.98M	-43.22M	-98.87M	-88.46M	18.65M
	Net Income Common Stockholders
-136.73M	-117.95M	-220.58M	-326.40M	-232.71M	-127.74M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
235.10M	162.98M	183.61M	213.71M	55.24M	56.31M
	Total Assets
2.37B	2.54B	2.47B	2.38B	2.10B	1.96B
	Total Debt
2.02B	2.31B	2.12B	1.90B	2.03B	1.75B
	Net Debt
1.78B	2.15B	1.94B	1.69B	1.98B	1.70B
	Total Liabilities
2.35B	2.69B	2.48B	2.20B	2.48B	2.00B
	Stockholders Equity
14.86M	-158.37M	-22.44M	176.13M	-432.42M	14.70M
Cash Flow		Free Cash Flow
-7.24M	-35.92M	-80.72M	-230.50M	-177.67M	-163.98M
	Operating Cash Flow
82.13M	49.81M	14.68M	-127.42M	-38.23M	-2.28M
	Investing Cash Flow
-78.67M	-84.21M	-94.14M	-119.14M	-139.87M	-210.78M
	Financing Cash Flow
-22.13M	4.91M	52.84M	408.16M	179.70M	196.96M

Soho House & Co Technical Analysis

Technical Analysis Sentiment

Negative

Last Price4.96

Price Trends

50DMA

6.89

Negative

100DMA

6.57

Negative

200DMA

6.00

Negative

Market Momentum

MACD

-0.15

Negative

RSI

44.91

Neutral

STOCH

20.59

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHCO, the sentiment is Negative. The current price of 4.96 is below the 20-day moving average (MA) of 6.23, below the 50-day MA of 6.89, and below the 200-day MA of 6.00, indicating a bearish trend. The MACD of -0.15 indicates Negative momentum. The RSI at 44.91 is Neutral, neither overbought nor oversold. The STOCH value of 20.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SHCO.

Soho House & Co Risk Analysis

Soho House & Co disclosed 69 risk factors in its most recent earnings report. Soho House & Co 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

Soho House & Co Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATAT	77 Outperform	$3.53B	20.13	50.89%	1.75%	53.63%	70.07%
HTHT	75 Outperform	$9.86B	24.26	25.06%	3.93%	7.68%	-25.12%
WH	72 Outperform	$6.79B	24.30	41.40%	1.98%	―	6.40%
H	64 Neutral	$10.12B	8.38	36.45%	0.57%	-6.41%	511.40%
CHH	60 Neutral	$5.56B	19.19	-661.94%	0.98%	2.63%	23.39%
Sector *	59 Neutral	$11.74B	10.16	-1.06%	4.15%	1.27%	-16.61%
SHCO	50 Neutral	$988.04M	―	49.70%	―	6.28%	-45.76%

* Consumer Cyclical Sector Average

Performance Comparison

SHCO

Soho House & Co

5.80

0.12

2.11%

HTHT

H World Group

32.53

-4.85

-12.97%

CHH

Choice Hotels

128.89

5.15

4.16%

Hyatt Hotels

119.16

-37.18

-23.78%

Wyndham Hotels & Resorts

87.68

15.56

21.58%

ATAT

Atour Lifestyle Holdings

23.00

5.14

28.78%

Soho House & Co Earnings Call Summary

Earnings Call Date: Mar 31, 2025 | % Change Since: -19.74% | Next Earnings Date: May 9, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong membership growth and operational improvements. However, financial misstatements, reduced guidance, and external challenges such as natural disasters impacted the company's financial outlook. The sentiment is balanced between positive membership and operational highlights and significant financial and environmental lowlights.

Highlights

Strong Membership Growth

Membership revenues increased 17% year-on-year and 5% quarter-on-quarter, with 4,000 new Soho House members, reaching approximately 208,000 members globally.

Total Revenue Growth

Total revenues grew 14% year-on-year to $333 million, driven by membership growth and improved spend per visit.

Adjusted EBITDA Improvement

Q3 adjusted EBITDA was $48 million, showing a 38% increase year-on-year, with margins improving approximately 250 basis points year-over-year.

Successful Opening of New Locations

Scorpios, Mykonos had a record-breaking season, and a new location opened in Bodrum. Soho Mews House opened in London with positive reception.

Operational Improvements

Focus on operational excellence with improvements in food and beverage margins and RevPAR up 5% year-over-year.

Lowlights

Lowered Revenue and EBITDA Guidance

Total revenue guidance lowered to around $1.2 billion and adjusted EBITDA guidance reduced to approximately $140 million due to weaker demand in food and beverage and accommodations.

Choppy Revenue Environment

In October, in-house revenue saw the weakest month for like-for-like year-over-year growth, with a mid-single-digit decline.

Financial Misstatements

Revisions made to financial statements from 2022 through the first half of 2024 due to misstatements found in prior period financial statements.

Impact of Natural Disasters

Operations affected by significant flooding at Soho-FarmHouse and recent Malibu fires, leading to temporary closures.

Increased Costs and Investments

Ongoing costs associated with ERP implementation and consulting fees, impacting current financial performance.

Company Guidance

During the Soho House & Co Q3 2024 earnings call, guidance was provided with several key metrics highlighted. Membership revenues increased by 17% year-on-year to $107 million, contributing to total revenues of $333 million, a 14% increase from the previous year. The company achieved an adjusted EBITDA of $48 million, marking a 38% growth year-on-year, although slightly below expectations, with margins improving by approximately 250 basis points. House level contribution rose by 17%, with margins up 150 basis points. Despite these gains, the company adjusted its total revenue guidance to around $1.2 billion, down from the previous range of $1.2 billion to $1.25 billion, due to weaker-than-expected demand in food, beverage, and accommodation segments. Adjusted EBITDA guidance was also revised to approximately $140 million, citing unique factors impacting results. Net debt was reported at $686 million, with a reduction in net debt to adjusted EBITDA ratio to 5x.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.