Taking everything into account, RH scores 4 out of 10 in our fundamental rating. RH was compared to 122 industry peers in the Specialty Retail industry. There are concerns on the financial health of RH while its profitability can be described as average. RH has a decent growth rate and is not valued too expensively.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year RH was profitable.
In the past year RH had a positive cash flow from operations.
RH had positive earnings in each of the past 5 years.
In the past 5 years RH always reported a positive cash flow from operatings.

1.2 Ratios

RH has a Return On Assets (2.29%) which is comparable to the rest of the industry.
The Return On Equity of RH (3285.39%) is better than 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 12.24%.

		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

With a decent Profit Margin value of 3.22%, RH is doing good in the industry, outperforming 69.67% of the companies in the same industry.
In the last couple of years the Profit Margin of RH has declined.
The Operating Margin of RH (10.49%) is better than 84.43% of its industry peers.
RH's Operating Margin has declined in the last couple of years.
RH's Gross Margin of 44.50% is fine compared to the rest of the industry. RH outperforms 70.49% of its industry peers.
In the last couple of years the Gross Margin of RH has remained more or less at the same level.

		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

RH has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
Compared to 1 year ago, RH has more shares outstanding
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

Based on the Altman-Z score of 1.42, we must say that RH is in the distress zone and has some risk of bankruptcy.
RH's Altman-Z score of 1.42 is on the low side compared to the rest of the industry. RH is outperformed by 66.39% of its industry peers.
RH has a debt to FCF ratio of 25.66. This is a negative value and a sign of low solvency as RH would need 25.66 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 25.66, RH is in line with its industry, outperforming 46.72% of the companies in the same industry.
A Debt/Equity ratio of 944.39 is on the high side and indicates that RH has dependencies on debt financing.
RH's Debt to Equity ratio of 944.39 is on the low side compared to the rest of the industry. RH is outperformed by 81.15% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	944.39
Debt/FCF	25.66
Altman-Z	1.42

ROIC/WACC0.8

WACC10.28%

2.3 Liquidity

A Current Ratio of 1.19 indicates that RH should not have too much problems paying its short term obligations.
RH's Current ratio of 1.19 is on the low side compared to the rest of the industry. RH is outperformed by 61.48% of its industry peers.
RH has a Quick Ratio of 1.19. This is a bad value and indicates that RH is not financially healthy enough and could expect problems in meeting its short term obligations.
RH has a worse Quick ratio (0.26) than 80.33% of its industry peers.

		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.
Looking at the last year, RH shows a quite strong growth in Revenue. The Revenue has grown by 9.74% in the last year.
The Revenue has been growing slightly by 3.74% on average over the past years.

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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 34.50 indicates a quite expensive valuation of RH.
RH's Price/Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Earnings ratio of 27.21, RH is valued a bit more expensive.
RH is valuated rather expensively with a Price/Forward Earnings ratio of 20.40.
Based on the Price/Forward Earnings ratio, RH is valued a bit cheaper than the industry average as 61.48% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, RH is valued a bit cheaper.

		Industry Rank	Sector Rank
PE	34.5
Fwd PE	20.4

4.2 Price Multiples

RH's Enterprise Value to EBITDA is on the same level as the industry average.
RH's Price/Free Cash Flow ratio is in line with the industry average.

		Industry Rank	Sector Rank
P/FCF	32.88
EV/EBITDA	14.89

4.3 Compensation for Growth

RH's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of RH 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.