RH Carries a 34.96 Forward P/E With EPS Set to Drop 90 Percent

NEW YORK — RH ended its recent trading session at $180.25, down 1.42 percent from its previous close, lagging the S&P 500's 0.26 percent gain on the same day. The Nasdaq rose 0.54 percent; the Dow Jones Industrial Average slipped 0.04 percent.

Despite the daily decline, RH has gained 4.76 percent over the past month, outpacing both the Consumer Staples sector, which lost one percent, and the S&P 500's 2.13 percent rise in the same period.

Investors are focused on the company's upcoming earnings report. Analysts project earnings per share of $0.29 for the quarter, a 90.1 percent drop from the same period last year. Revenue estimates for the report stand at $913.96 million, up 1.65 percent year over year.

For the full fiscal year, the Zacks Consensus Estimate puts RH's earnings at $5.23 per share, a 16.85 percent decline from the prior year. Full-year revenue is projected at $3.62 billion, a 5.11 percent increase.

Analyst estimates have not moved in the past 30 days, signaling limited confidence in RH's near-term earnings potential. The Zacks Rank system, which tracks estimate revisions on a scale from No. 1 (Strong Buy) to No. 5 (Strong Sell), currently rates RH No. 4 (Sell).

Valuation is the other problem. RH trades at a forward P/E of 34.96, well above its industry peers' average of 20.19. Its PEG ratio of 3.5 also exceeds the Consumer Products—Staples industry average of 3.36.

The Consumer Products—Staples industry itself carries a Zacks Industry Rank of 214, placing it in the bottom 14 percent of more than 250 industries tracked.

Despite the daily decline, RH has gained 4.76 percent over the past month, outpacing both the Consumer Staples sector, which lost one percent, and the S&P 500's 2.13 percent rise in the same period.

The Consumer Products—Staples industry itself carries a Zacks Industry Rank of 214, placing it in the bottom 14 percent of more than 250 industries tracked.