Restoration Hardware (RH), the luxury furniture retailer has also taken a pounding lately.
Its forward PE is now 15 (5 year avg is 27)
ROTC 18% (5yr avg 13%)
Oper Margin 28% (5 yr avg 16%)
3-5 year projected EPS growth is 19%
At more than USD 530 per household in 2020, average U.S. household spending on furniture reached its highest levels in more than a decade. Average annual furniture spending from affluent U.S. households’ - RH’s target market - was nearly double the national average.
Growth was further supported by a buoyant luxury real estate market which began to boom in 2020 as an increasing proportion of affluent homeowners working from home prompted them to seek out larger living spaces. The momentum shows no sign of stopping with US super luxury home sales (priced at USD 50 million and above) jumping 35% in 2021 compared to 2020. U.S. luxury home sales (priced at USD 10 million and above) doubled in 2021.
BRK started buying in 2019 Q3 and added as recently as 2021Q4. Highest price paid has been $679. Stock now trades at $381. BRK owns 1.82 million shares or around 9% of the company. RH market cap is less than $10 billion. BRK could easily acquire it even with a decent premium to today’s price.
Since I am pretty low on cash, I wonder what will be a good options strategy for maximum gain, were RH to trade above $600 in 18-24 months. It was trading above $600 as recently as Dec 2021.