RH Stock Climbs 19% in Past Month: Buy the Surge or Pull Back?

Core Viewpoint - RH has experienced an 18.5% increase in stock price over the past month, outperforming the Hoya Capital Housing ETF (HOMZ) index, indicating strong market performance and investor interest [1] Group 1: Company Performance - RH is benefiting from investments across its brand portfolio, leading to improvements in the Furniture & Home Furnishing business [2] - The company has outperformed competitors such as Williams-Sonoma, Arhaus, and Lovesac, which saw stock price increases of 16.3%, 12%, and 5.1% respectively over the same period [3] - RH's Q1 demand in Europe rose by 60%, with significant openings planned in Paris, London, and Milan by 2026 [6][9] Group 2: Market Trends - The Furniture & Home Furnishing business saw a year-over-year sales growth of 4.5% in June 2025, reflecting positive market trends [4] - RH is positioned to meet its fiscal 2025 revenue guidance, expecting growth between 10% and 13% year-over-year [5] Group 3: Global Expansion and Sourcing Strategies - RH is strategically expanding into international markets, particularly Europe, where demand is strong [6][9] - The company is shifting its sourcing from China to the US and Italy to mitigate tariff impacts, projecting a reduction in receipts from China from 16% to 2% by Q4 of fiscal 2025 [10] Group 4: Valuation and Earnings Estimates - RH's stock is trading at a forward P/E ratio of 17.55, which is lower than competitors Williams-Sonoma and Arhaus, suggesting a potentially attractive valuation for investors [11] - Earnings estimates for fiscal 2025 and 2026 have been revised to $10.76 and $14.61 per share, indicating year-over-year growth of 99.6% and 35.8% respectively [12] Group 5: Challenges and Risks - The softness in the U.S. housing market is impacting RH's revenue visibility, as high mortgage rates and affordability concerns suppress new home sales and renovation activities [15] - Tariff-related risks are a concern, with the company facing potential revenue impacts due to new tariffs announced in April 2025 [17]