Assessing RH (RH) Valuation After Revenue Growth And New Store Concept Rollout

RH (RH) is back in focus after reporting 9% revenue growth in 2025 during what it called the worst housing market in almost 50 years, while rolling out new sourcebooks and reshaping its store footprint.

See our latest analysis for RH.

RH’s latest sourcebook launches and store footprint changes come against a weak share price backdrop, with a 17.08% 1 month share price decline and a 45.30% 1 year total shareholder return loss. The 90 day share price return of 18.65%, however, hints at improving momentum.

If RH’s repositioning has you rethinking where growth could come from next, it might be worth widening your scope with our screener of 22 top founder-led companies.

With RH’s shares down 45.30% over the past year but trading at an intrinsic discount of 55.22%, investors are left asking: is this a reset that opens the door to upside, or is the market already pricing in future growth?

Most Popular Narrative: 10% Undervalued

RH’s most followed narrative points to a fair value of about $210.35 versus the last close of $189.38. This frames the recent share weakness as a valuation gap rather than a verdict on the business.

The company's plans to monetize assets, including real estate with an estimated equity value of approximately $500 million and excess inventory valued at $200 million to $300 million, could boost cash flow and help in reducing debt, potentially improving net margins and lowering interest expenses.

Read the complete narrative.

Curious what has to go right for that valuation to stack up? The narrative leans on stepped up earnings growth, firmer margins, and a future profit multiple that looks very different to today. The full story connects those moving parts into one pricing case.

Result: Fair Value of $210.35 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this hinges on a fragile housing market and RH’s sizeable US$2.2b repurchase-driven debt load, which could tighten the screws if conditions turn.

Find out about the key risks to this RH narrative.

Another Angle: Premium Price, Different Story

While the SWS DCF model suggests RH is trading 55.2% below its future cash flow value of $422.92, the market is telling a different story on price. At a P/E of 32.3x, RH screens as expensive versus the US Specialty Retail industry at 21.9x and its peer average of 20.6x. It also sits above its own fair ratio of 30.5x, which is the level the multiple could move toward if sentiment cools.

That mix of DCF upside and a rich earnings multiple leaves you with a simple tension: is this a mispriced cash flow story or a case where the multiple might have to blink first?

Look into how the SWS DCF model arrives at its fair value.

Next Steps

If this mix of opportunity and concern feels finely balanced, now is a good time to review the numbers for yourself, consider your position, and read 3 key rewards and 2 important warning signs.

Ready for more investment ideas?

If RH has sharpened your focus on where value and resilience could show up next, do not stop here, use the Simply Wall St screener to spot other opportunities.

• Target potential mispricings by scanning a focused set of 56 high quality undervalued stocks that pair quality fundamentals with prices that may not fully reflect them yet.
• Strengthen your watchlist with companies passing our solid balance sheet and fundamentals stocks screener (42 results) so you can focus on businesses backed by healthier financial foundations.
• Hunt for fresh ideas beyond the usual names using our screener containing 23 high quality undiscovered gems, where you might find quality stories that fewer investors are paying attention to right now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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