RH (NYSE:RH) Shares Down 8.4% - Time to Sell?

Key Points

• RH shares fell 8.4% to about $155.76 in midday trading, underperforming amid a pessimistic JPMorgan forecast and broader concerns about slowing demand and elevated volatility.
• The latest quarter modestly beat expectations, with revenue of $800.3 million and an adjusted loss of $1.97 per share, but revenue declined 1.7% year over year and RH swung from a prior-year profit to a loss.
• Analyst sentiment remains mixed, with a consensus “Hold” rating and an average price target of $173.36, while investors also face balance-sheet concerns, including a 0.32 quick ratio and high debt-to-equity ratio.

RH (NYSE:RH - Get Free Report)'s share price was down 8.4% during mid-day trading on Thursday . The stock traded as low as $155.54 and last traded at $155.76. Approximately 458,287 shares changed hands during mid-day trading, a decline of 56% from the average session volume of 1,048,995 shares. The stock had previously closed at $169.97.

More RH News

Here are the key news stories impacting RH this week:

• Negative Sentiment: JPMorgan issued a pessimistic forecast for RH, adding pressure to the stock and reinforcing concerns about the company’s earnings outlook and valuation. JPMorgan Chase & Co. Issues Pessimistic Forecast for RH Stock Price
• Negative Sentiment: RH has recently underperformed the broader market, with investors remaining focused on slowing growth, elevated volatility and uncertainty around demand for its high-end home furnishings. RH Sees a More Significant Dip Than Broader Market
• Neutral Sentiment: In its latest quarterly report, RH posted revenue of approximately $800.3 million, slightly ahead of estimates, and an adjusted loss of $1.97 per share that was better than expected. However, revenue declined 1.7% year over year and the company swung from a profit in the comparable quarter to a loss, limiting the positive impact of the earnings beat.
• Negative Sentiment: RH’s financial profile remains a concern for investors: liquidity is limited, with a quick ratio of 0.32, while its debt-to-equity ratio is high. The stock’s elevated price-to-earnings and PEG ratios also leave less room for disappointment if growth does not reaccelerate.

Wall Street Analysts Forecast Growth

Several equities analysts recently issued reports on the company. Zacks Research upgraded RH from a "strong sell" rating to a "hold" rating in a research report on Tuesday, June 16th. Weiss Ratings restated a "sell (d)" rating on shares of RH in a report on Friday, July 24th. TD Cowen reaffirmed a "buy" rating on shares of RH in a research note on Monday, August 10th. KeyCorp reiterated a "sector weight" rating on shares of RH in a report on Friday, June 12th. Finally, Morgan Stanley reissued an "overweight" rating and set a $240.00 price objective on shares of RH in a research report on Monday, May 11th. Seven equities research analysts have rated the stock with a Buy rating, ten have issued a Hold rating and three have issued a Sell rating to the company's stock. According to data from MarketBeat.com, the company presently has an average rating of "Hold" and an average target price of $173.36.

RH Price Performance

The company has a current ratio of 1.13, a quick ratio of 0.32 and a debt-to-equity ratio of 54.96. The company's 50 day moving average is $169.57 and its 200-day moving average is $156.72. The firm has a market capitalization of $2.94 billion, a price-to-earnings ratio of 30.04, a P/E/G ratio of 4.00 and a beta of 1.87.

RH (NYSE:RH - Get Free Report) last released its quarterly earnings data on Thursday, June 11th. The company reported ($1.97) earnings per share (EPS) for the quarter, beating analysts' consensus estimates of ($2.12) by $0.15. RH had a return on equity of 423.79% and a net margin of 3.01%.The company had revenue of $800.33 million during the quarter, compared to analysts' expectations of $792.55 million. During the same period last year, the firm posted $0.13 earnings per share. The business's revenue was down 1.7% on a year-over-year basis. Equities research analysts anticipate that RH will post 4.27 earnings per share for the current year.

Insiders Place Their Bets

In other RH news, CEO Gary G. Friedman sold 48,238 shares of the stock in a transaction on Wednesday, July 8th. The stock was sold at an average price of $158.66, for a total transaction of $7,653,441.08. Following the transaction, the chief executive officer owned 3,226,337 shares in the company, valued at $511,890,628.42. This trade represents a 1.47% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available at this hyperlink. Also, Director Carlos Alberini bought 11,388 shares of the firm's stock in a transaction on Monday, June 29th. The shares were acquired at an average price of $160.90 per share, for a total transaction of $1,832,329.20. Following the transaction, the director owned 32,190 shares in the company, valued at approximately $5,179,371. This represents a 54.74% increase in their ownership of the stock. The SEC filing for this purchase provides additional information. Insiders sold 132,749 shares of company stock worth $21,856,812 over the last three months. Insiders own 26.90% of the company's stock.

Institutional Investors Weigh In On RH

A number of large investors have recently bought and sold shares of the company. BlackRock Inc. lifted its holdings in shares of RH by 41.7% during the 2nd quarter. BlackRock Inc. now owns 1,978,271 shares of the company's stock worth $325,881,000 after acquiring an additional 581,710 shares during the period. Alyeska Investment Group L.P. increased its stake in RH by 4.4% in the second quarter. Alyeska Investment Group L.P. now owns 1,708,997 shares of the company's stock valued at $281,523,000 after acquiring an additional 72,674 shares during the last quarter. Senvest Management LLC raised its position in RH by 30.1% during the fourth quarter. Senvest Management LLC now owns 842,577 shares of the company's stock valued at $150,948,000 after purchasing an additional 194,773 shares in the last quarter. Durable Capital Partners LP raised its position in RH by 125.1% during the second quarter. Durable Capital Partners LP now owns 646,097 shares of the company's stock valued at $122,119,000 after purchasing an additional 359,101 shares in the last quarter. Finally, Alliancebernstein L.P. lifted its stake in RH by 66.1% during the third quarter. Alliancebernstein L.P. now owns 573,666 shares of the company's stock worth $116,546,000 after purchasing an additional 228,229 shares during the last quarter. 90.17% of the stock is currently owned by institutional investors and hedge funds.

RH Company Profile

RH, formerly Restoration Hardware, is a design-driven luxury retailer specializing in high-end home furnishings, décor, textiles, lighting and outdoor living products. The company offers a curated collection of furniture pieces—including seating, casegoods, beds and dining items—alongside rugs, art and decorative accessories. RH's product lines are organized into distinct collections, each reflecting a cohesive design philosophy and premium craftsmanship aimed at the residential and hospitality markets.

Founded in 1979 in Eureka, California, by Stephen Gordon, Restoration Hardware began as a small warehouse in Northern California.

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