RH

RH

Consumer


Presented:09/03/2020
Price:$320.04
Cap:$6.17B
Current Price:$335.32
Cap:$6.20B

Presented

Date09/03/2020
Price$320.04
Market Cap$6.17B
Ent Value$4.50B
P/E Ratio42.58x
Book Value$0.99
Div Yield0%
Shares O/S19.29M
Ave Daily Vol696,946
Short Int30.55%

Current

Price$335.32
Market Cap$6.20B
RH operates as a holding company which operates the business through its subsidiary Restoration Hardware, Inc. It offers furniture, lighting, textiles, bathware, decor, outdoor and garden, as well as baby and child products. The company operates an integrated business with multiple channels of distribution including galleries, source books and websites. The company was founded by Stephen J. Gordon in 1980 and is headquartered in Corte Madera, CA.

Publicly traded companies mentioned herein: LVMH Moet Hennessy Louis Vuitton SE (MC FP), RH (RH), Tiffany & Co (TIF), 

Highlights

The presenter is long shares of RH (RH), formerly Restoration Hardware, viewing it as both a differentiated furniture retailer which is undervalued, and a luxury brand which deserves a premium multiple. His thesis consists of three major components 1) RH is a differentiated, experiential retail concept with strong pricing power, in the midst of a value-creating real estate transformation plan, 2) continued margin expansion, and 3) the launch of their international business in 2021 or 2022. Now that Tiffany’s is being acquired by LVMH for ~$16B, RH is one of the few companies left in both of these buckets, which warrants some scarcity value (since this idea was presented, LVMH has pulled out from acquiring Tiffany’s). In the near term, he thinks a 25x EPS multiple on a luxury company with accelerating growth and a large international opportunity is reasonable. Applying that 25x to his 2021 EPS estimate of $17, equates to a near term price target of ~$425 or 30% upside from current levels. 

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Idea Discussion

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