Trump Just Gave RH Stock a Major Reprieve for 2026. Does That Make It a Buy Here?

Core Viewpoint - Trade policy significantly impacts retail and consumer discretionary stocks, particularly those with global supply chains, as tariffs can affect margins and investor sentiment. The recent delay of higher tariffs on furniture imports by President Trump provides unexpected relief for the industry, especially for companies like RH [1][5]. Group 1: Company Overview - RH, formerly known as Restoration Hardware, is a luxury retailer specializing in upscale home furnishings and décor, offering a range of products including furniture, lighting, textiles, and outdoor living items [3]. - The company has a market capitalization of $3.6 billion and faced a challenging 2025, with its stock declining over 50% year-to-date due to high mortgage rates and slowing home sales impacting demand for luxury furnishings [3]. Group 2: Impact of Tariff Delay - The delay of higher tariffs on imported furniture until 2027 alleviates a significant near-term risk for RH, allowing the company to manage supply chains and protect gross margins without passing costs onto consumers [5]. - Following the announcement of the tariff delay, RH's shares surged approximately 8%, reflecting market optimism and improving the outlook for the company's earnings in 2026 [2][5]. Group 3: Valuation Metrics - Despite the recent stock rebound, RH is trading at a premium valuation, with a price/book ratio of 1,003, significantly higher than the sector median of 2, indicating potential overvaluation [4]. - RH's price/earnings ratio stands at 29, which is notably above the sector average of 17, suggesting that the stock's valuation may be stretched [4].