Soho House & Co (SHCO) AI Stock Analysis

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Soho House & Co

(NYSE:SHCO)

44Neutral

The overall score of Soho House & Co reflects strong revenue growth but significant challenges in profitability and financial stability due to high debt levels. Technical indicators provide mixed signals, with some recent upward momentum but caution suggested by overbought signals. Valuation is hampered by ongoing losses and lack of dividends, making the stock less attractive for investors seeking positive earnings and income.

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

$1.17B

Dividend YieldN/A

Average Volume (3M)378.05K

Price to Earnings (P/E)―

Beta (1Y)1.09

Revenue Growth6.28%

EPS Growth-45.76%

CountryUS

Employees8,038

SectorConsumer Cyclical

Sector Strength66

IndustryTravel Lodging

Share Statistics

EPS (TTM)-0.88

Shares Outstanding52,996,502

10 Day Avg. Volume237,212

30 Day Avg. Volume378,046

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap3.13

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit6.48

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$9.00

Price Target Upside49.75% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Soho House & Co Business Overview & Revenue Model

Company DescriptionSoho House & Co (SHCO) is a global private members' club organization that caters to individuals in the creative industries. Founded in 1995 in London, the company operates a portfolio of clubs, hotels, and restaurants around the world, providing spaces for members to connect, socialize, and collaborate. Known for its exclusive membership and stylish interiors, Soho House offers a variety of services including accommodation, dining, wellness, and event spaces.

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 is experiencing strong revenue growth, yet it struggles with profitability and a high debt burden. While operational cash flow has improved, the company remains financially strained with negative equity and ongoing losses. The travel lodging industry is inherently capital-intensive, and the company must manage its leverage carefully to stabilize its financial position.

Income Statement

Neutral

Soho House & Co has shown a notable increase in total revenue over the past years, improving from $384 million in 2020 to $1.2 billion in 2024. However, the company's profitability remains a concern as it continues to report negative EBIT, EBITDA, and net income. The gross profit margin has improved significantly, indicating better cost management, but the net profit margin remains negative. Revenue growth is evident, yet the consistent losses indicate ongoing operational challenges.

Balance Sheet

Negative

The balance sheet shows a significant amount of debt, exceeding its total assets, leading to negative stockholders' equity. The debt-to-equity ratio is concerning, reflecting high leverage and financial risk. Return on equity is not applicable due to negative equity. The company's reliance on debt financing poses risks, despite some improvement in asset values.

Cash Flow

Neutral

Cash flow from operations has improved, turning positive in the latest period, which is a positive sign. However, free cash flow remains volatile, with some improvement over the years. The operating cash flow to net income ratio indicates better cash generation relative to net income losses, but the overall cash flow position remains precarious due to high capital expenditure and debt servicing.

Dec 2024	Dec 2023	Mar 2023	Mar 2022	Dec 2020
Breakdown
Income Statement		Total Revenue
1.20B	1.14B	972.21M	560.55M	384.38M
	Gross Profit
565.47M	546.52M	447.29M	251.71M	164.34M
	EBIT
-70.04M	-23.00M	-147.48M	-188.03M	-154.73M
	EBITDA
34.80M	85.98M	-43.22M	-98.87M	-88.46M
	Net Income Common Stockholders
-162.97M	-117.95M	-220.58M	-326.40M	-232.71M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
155.09M	162.98M	183.61M	213.71M	55.24M
	Total Assets
2.44B	2.54B	2.47B	2.38B	2.10B
	Total Debt
1.47B	2.31B	2.12B	1.90B	2.03B
	Net Debt
1.32B	2.15B	1.94B	1.69B	1.98B
	Total Liabilities
2.77B	2.69B	2.48B	2.20B	2.48B
	Stockholders Equity
-335.06M	-158.37M	-22.44M	176.13M	-432.42M
Cash Flow		Free Cash Flow
7.75M	-35.92M	-80.72M	-230.50M	-177.67M
	Operating Cash Flow
89.68M	49.81M	14.68M	-127.42M	-38.23M
	Investing Cash Flow
-71.24M	-84.21M	-94.14M	-119.14M	-139.87M
	Financing Cash Flow
-19.91M	4.91M	52.84M	408.16M	179.70M

Soho House & Co Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price6.01

Price Trends

50DMA

6.33

Negative

100DMA

6.60

Negative

200DMA

5.99

Negative

Market Momentum

MACD

-0.24

Negative

RSI

52.55

Neutral

STOCH

81.30

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHCO, the sentiment is Neutral. The current price of 6.01 is above the 20-day moving average (MA) of 5.52, below the 50-day MA of 6.33, and above the 200-day MA of 5.99, indicating a neutral trend. The MACD of -0.24 indicates Negative momentum. The RSI at 52.55 is Neutral, neither overbought nor oversold. The STOCH value of 81.30 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATAT	77 Outperform	$3.27B	18.54	50.89%	1.74%	53.63%	70.07%
WH	72 Outperform	$6.61B	23.64	41.40%	1.80%	―	6.40%
HTHT	70 Outperform	$11.07B	26.50	25.06%	3.54%	7.68%	-25.12%
H	69 Neutral	$10.41B	8.62	36.45%	0.53%	-6.41%	511.40%
CHH	69 Neutral	$5.88B	20.34	-661.94%	0.91%	2.63%	23.39%
Sector *	60 Neutral	$6.58B	11.55	3.14%	4.05%	2.58%	-21.37%
SHCO	44 Neutral	$1.17B	―	49.70%	―	6.28%	-45.76%

* Consumer Cyclical Sector Average

Performance Comparison

SHCO

Soho House & Co

6.01

0.72

13.61%

HTHT

H World Group

34.24

-3.47

-9.20%

CHH

Choice Hotels

126.11

7.15

6.01%

Hyatt Hotels

112.68

-38.38

-25.41%

Wyndham Hotels & Resorts

85.30

12.76

17.59%

ATAT

Atour Lifestyle Holdings

24.44

6.08

33.12%

Soho House & Co Earnings Call Summary

Earnings Call Date:Mar 31, 2025

(Q3-2024)

% Change Since: -2.75%|

Next Earnings Date:May 09, 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.

Q3-2024 Updates

Positive Updates

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.

Negative Updates

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.