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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Rh (XNYS:RH) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
RH
Name:
RH (XNYS:RH)
Sector:
140.62M
Industry:
Specialty Retail
CEO:
Mr. Gary Friedman
Total Employees:
5,700
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -190.09% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF RH(RH) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SPECIALTY RETAIL INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
252.17
One Month Price Target:
$255.4
Six Month Price Target :
$271.52
Likely Price in One Year's Time:
Ticker:
$290.87
Likely Trading Range Today Under (Normal Volatility)
$250.67
Price Upper limit ($) :
$254.13
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$231.48
This week:
$205.9
This month :
$159.63
Other Primary facts
Market Cap:
6.02B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
24.68M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
29.38%
-23.65%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$348.17
$304.01
$156.17
$200.33
Medium risk (<10%) entry points
Buy Call
Sell Call
$289.63
Buy Put:
Sell Put:
$280.20
$214.59
$224.14
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
RH
Sharpe Ratio:
2.07%
Comparison:
RH, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is -27.74% lower than the industry
& is -9.32% lower than the market/S&P 500 average
Average Returns/Yield of
RH
Daily returns:
0.09%
Weekly returns:
0.46%
Monthly returns:
1.85%
Yearly returns:
34.92%
Comparison of returns:
Average annual returns/yield (last 3 years) is -36.53% below industry average
Classification:
RH, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.9
Statistical test of Returns:
RH has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
4.04%
Weekly Volatility:
9.03%
Monthly Volatility:
18.07%
Yearly Volatility:
62.60%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.57%
Volatility in last five trading days has been -61.17% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-8.21%
Weekly VaR:
-18.35%
Monthly VaR:
-36.70%
How Much Can the price of
RH
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-31%
Worst case (decline):
>85%
This translates to price declining to:
$173.00
This translates to price declining to:
$37.83
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
RH is a 159.01% riskier investment compared to the market/S&P 500 & is 121.89% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -2.72% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
RH
Beta in relation to market/S&P 500--2.28
Expected beta in 1 year's time:
1.474
Expected beta in 3 year's time:
2.084
Unlevered (debt free) Beta:
0.842
Beta in relation to Nasdaq (XNAS):
1.444
Beta in relation to all global stocks::
1.319
Beta Comparison & Analysis
Beta of competitors/peers::
1.2
Beta is 90.32% higher than peers
Average Industry Beta:
1.43
Beta is 59.74% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
94.21%
Sustainable growth rate is 183.72% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.034
Alpha is -84.66% below industry average alpha yield
Alpha is 215% higher than market/& is unsustainably high
Analysis of Cost of Capital of
RH
Equity cost of capital:
0.188
Equity cost of capital is 45.21% above industry mean WACC
Unlevered (without debt) cost of capital:
6.93%
Before-tax cost of debt:
4.18%
After-tax cost of debt:
3.30%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.30%
WACC is 46.05% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$156.20
Revenue growth rate per share of (3Y):
10.47
Annual revenue growth rate is 105.20% above the industry average
EPS:
$24.92
Expected Annual growth rate of EPS (3Y):
46.98%
Expected future EPS growth rate is 33.39% higher than the Specialty Retail industry
Free cash flow (FCF) per share:
$14.30
-
-
Debt per share
$65.27
EBITDA per share
$46.93
Valuation Analysis Today of
RH
P/E Ratio:
10.12
P/E Ratio of Competitors/Peers:
19.25
P/E ratio is -47.42% lower than main peers & is -52.95% lower than the industry
Stock price/value with industry average P/E ratio: $536.03
RH is -52.96% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
1.61
Price to sales ratio is -60.31% below the industry mean
P/B (Price to book value ratio):
10.47
Price to free cash flow: 17.64
Price to free cash flow ratio is -32.08% lower than the industry
Net income growth rate (3Y):
-14532.02%
Net income growth rate is 2970.39% higher than the average industry net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
270.98%
Net debt to equity ratio:
251.85%
Debt to assets ratio:
49.76%
Net debt to assets ratio:
46.25%
Debt-to-asset ratio is -31.23% below industry average
Ability to repay debt:
Interest coverage ratio:
16.04
Interest coverage ratio is -35.23% less than industry average
Looking forward:
Debt growth rate:
50.56%
Annual debt growth is -28% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.71%
Analysis of Key Statistics
Correlation of price movement with the market:
0.66
Statistical significance of correlation:
RH has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.475
Stock price is 38.92% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.475
Correlation of price movement with Nasdaq (^IXIC):
-0.041
Covariance of price movement with the market:
-0.095
Kurtosis
8.574
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.526
Returns are right (positive) skewed; mean returns are greater than median and mode returns
Fundamental Analysis & Dupont Analysis of
RH
Gross Profit Margin Ratio:
202%
Operating Profit Margin Ratio:
24.50%
Operating profit margin is 276.86% higher than the industry
Net Profit Margin Ratio:
202%
Effective Tax Rate:
36.75%
Effective tax rate is 62.97% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
127.61%
Return on equity (ROE) is 8870.67% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
23.43%
Return on assets (ROA) is 151.86% higher than the industry
Financial Leverage:
2.0x
Current Ratio:
0.97
Current ratio is -48.42% below industry average
Cash Conversion Cycle (days):
30.3
Cash conversion cycle is -53.20% below industry average
The remaining useful life of property plant & equipment is: 2.0 years
Stock based compensation to net income ratio:
2.02%
In-depth Efficiency Analysis
Revenue generated per employee:
676.4K
Each employee generates -8% less revenue than industry average revenue per employee
EBITDA generated per employee:
203.2K
Each employee generates -16% less EBITDA than industry average revenue per employee
Profit generated per employee:
133.1K
Each employee generates -10% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
24.7K
Each employee generates -40% less free cash flow than industry average revenue per employee
Assets/Capital per employee
394.4K
Each employee generates -40% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
RH
HYATT HOTELS CORPORATION (XNYS:H)
GAMESTOP CORP. (XNYS:GME)
TAPESTRY, INC. (XNYS:TPR)
SERVICE CORPORATION INTERNATIONAL (XNYS:SCI)
WILLIAMS-SONOMA, INC. (XNYS:WSM)
On Holding Ltd (XNYS:ONON)
LEAR CORPORATION (XNYS:LEA)
Berry Global Group, Inc. (XNYS:BERY)
SEALED AIR CORPORATION (XNYS:SEE)
Current Analyst Ratings
Strong buy�13%
Buy�4%
Hold�67%
Sell�4%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
4/30/22
Revenue:
3.86B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
1.91B
1.95B
-
-
1.00B
-
-
1.00B
1.02M
72.20M
72.14M
1.16B
944.58M
758.60M
694.50M
255.26M
758.60M
Statement of Cash Flow
Date:
Period:
23.89M
Differed Income Tax :
-
Stock Based Compensation :
15.31M
Change in Working Capital :
- 10834.00K
Accounts Receivables:
- 722.00K
Other Working Capital:
82.74M
Other Non-Cash Items:
31.86M
Net Cash Provided by Operating Activities:
190.88M
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
- 1172.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
5/1/21
2022
Q1
229.53M
-
229.53M
74.03M
593.95M
91.91M
989.41M
1.81B
141.15M
72.24M
99.13M
49.87M
70.70M
2.25B
-
3.24B
231.90M
115.83M
114.79M
381.98M
286.46M
1.02B
1.61B
11.37M
1.63B
-
2.64B
2.00K
- 6782.00K
3.9M
597.33M
May 1, 2021 at 6:00:00 AM
2.91B
594.46M
3.24B
-
1.73B
1.5B
-
- 50251.00K
- 51423.00K
- 11498.00K
-
-
-
466.00K
- 11032.00K
36.00K
135.08M
235.53M
100.45M
190.88M
- 50251.00K
140.62M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
RH
2023
2024
2025
2026
2027
$292.32
$519.92
$599.72
$691.77
$797.95