Raising RH Fair Value in Response to Strategy Offered at Investor Day; Shares Remain Overvalued
After no-moat RH presented at its recent Investor Day, we reassessed our thesis on the firm. While our outlook for the home furnishing and housing demand is unchanged, we do believe the firm has made a shift-change to its business model, which could set it on track to reach higher operating margins than we previously modeled (at just below 10% versus 8.5% prior). We are raising our fair value estimate to $81 from $53 per share after updating our model to account for lower capital expenditures (a...RH is a holding company. Together with its subsidiaries, the company is a retailer in the home furnishings marketplace. The company provides merchandise assortments across a number of categories, including furniture, lighting, textiles, bathware, decor, outdoor and garden, and child and teen furnishings. The company positions its Galleries as showrooms for its brand, while its Source Books and websites act as virtual extensions of its stores. The company's business is integrated across its various channels of distribution, consisting of its stores, Source Books, and websites. The company operates its retail Galleries throughout the U.S. and Canada, and its Waterworks showrooms throughout the U.S. and in the U.K.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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