RH (RH:NYS) Fundamental Valuation Report

Fundamental Valuation Report

RH(RH:NYS)

Consumer Cyclical:Specialty Retail

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$381.54 (USD) 09/16/2020

Weighted Valuation
$380.00 (USD)

Overall Rating
Fairly valued to slightly Overvalued by 0.4%

Valuation Models Comparables: $153.37 (USD)
(in order of importance) Discounted Cash Flow: $220.63 (USD)
Multiples: $177.30 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $380.00 this stock is Fairly valued

Company Overview (RH:NYS USD)

Price 381.54
Range 375.74 – 395.00
52 week 80.43 – 385.46
Open 378.86
Vol / Avg. 786944/863642
Mkt cap 7.44B
P/E 44.30
Div/yield 0.00/0.00
EPS 9.07
Shares 19.51M
Beta 2.57

Company Description

RH is a luxury retailer operating in the $117 billion furniture and home furnishing industry. The company offers merchandise across many categories including furniture, lighting, textiles, bath, decor, children, and more and is growing the presence of its hospitality business (with 10 restaurant locations). RH innovates, curates, and integrates products, categories, services, and businesses across channels and brand extensions (RH Teen, RH Modern, and Waterworks, for example). The company is fully integrated across store, Web, and catalog channels, with around 40% of sales from the direct-to-consumer channel in 2019.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for RH:NYS

Using a discounted cash flow model we generated an intrinsic value of $220.63 (USD) for RH:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

RH:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $220.63 1% 5% 1% 5%
WACC (or Ke) 14.94 $244.39 $200.55
Terminal Growth Rate 3.00 $204.53 $239.68
Tax Rate 0.18 $235.83 $205.43
Cash Flow 785,581,000 $208.16 $233.11
Capital Expenditures -2,799,800 $220.60 $220.67
Long Term Debt 716,953,000 $222.47 $218.80

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $126.37 (USD) for RH:NYS. We also generated a valuation of $153.37 (USD) using other metrics and comparables.
The comparable companies were Bed Bath & Beyond (BBBY:NAS), Best Buy Co (BBY:NYS), Genuine Parts (GPC:NYS), 1-800-Flowers.com (FLWS:NAS) and Advance Auto Parts (AAP:NYS).

Company RH:NYS End Date Value
Earnings/Share $8.61 (USD)
Book Value/Share $6.58 (USD)
Sales/Share $100.68 (USD)
Cash Flow/Share $14.71 (USD)
EBITDA/Share $18.04 (USD)
Price Based on Comps Adjustment Factor (%)
$191.58 (USD) 0.0
$26.48 (USD) 0.0
$75.25 (USD) -28.1
$82.67 (USD) 0.0
$295.01 (USD) -8.2
RH:NYS Ratios Used Average Values BBBY:NAS BBY:NYS GPC:NYS FLWS:NAS AAP:NYS
44.31 PE Ratio 185.62 0.00 17.41 675.73 25.55 23.79
57.95 PB Ratio 4.02 1.11 7.34 5.13 3.66 2.87
3.79 PS Ratio 0.75 0.16 0.65 0.79 1.01 1.12
25.94 PCF Ratio 10.66 14.90 4.92 9.55 10.83 13.12
21.31 EV to EBITDA 16.36 0.00 8.80 29.84 12.30 14.49

Multiples

Using a multiples approach we generated a valuation of  $177.30 (USD) for RH:NYS

Company RH:NYS End Date Value
Earnings/Share $8.61 (USD)
Book Value/Share $6.58 (USD)
Sales/Share $100.68 (USD)
Cash Flow/Share $14.71 (USD)
EBITDA/Share $18.04 (USD)
Price Based on Comps Adjustment Factor
$294.29 (USD) 0
$29.69 (USD) 0
$127.91 (USD) 0
$169.58 (USD) 0
$265.02 (USD) 0
Ratios Ratio Average
PE Ratio 34.18
PB Ratio 4.51
PS Ratio 1.27
PCF Ratio 11.53
EV to EBITDA 14.69

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  RH:NYS for the last 8 years was  4.46

We ran the Adjusted Book Value for  RH:NYS and generated a book value of  $6.68 (USD)
By multiplying these we get an adjusted valuation of  $29.80 (USD)

Analyst Data

In the Stockcalc database there are 1 analysts that provide a valuation for RH:NYS. The 1 analysts have a concensus valuation for RH:NYS for 2021 of $380.00 (USD).

RH:NYS RH

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
0 2 0 2.6667 Hold 2020-9-15

Current Price: 381.54 USD

Analyst Consensus
USD Millions 2021 2022 2023
Mean EPS 16.28 17.52 19.75
# EPS Analysts 2 2 1
Mean Revenue 2,801.40 2,953.70 3,148.80
# Revenue Analysts 2 2 1
Mean Target Price 380.00
Mean Cash Flow 22.42 22.85 23.51
Mean EBITDA 662.70 706.20 762.70
Mean Net Income 418.50 442.90 495.30
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate 12.90
Mean Capital Expenditure 104.30 114.00 94.50

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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