RH: Exploring Valuation as Tariff Investigation Fuels Investor Uncertainty

A fresh U.S. investigation into furniture imports, announced by President Trump, has rattled investors in RH (RH). With the possibility of new tariffs looming, the market’s attention quickly shifted to how this could affect the company’s bottom line.

See our latest analysis for RH.

RH’s share price has taken a hit lately, down more than 31% over the past three months and showing a year-to-date price return of -58.95%. This sharp pullback has erased earlier gains and comes alongside heightened tariff fears and broader uncertainty in the furniture sector. Looking at the bigger picture, RH’s one-year total shareholder return stands at -50.85%, and the longer-term five-year TSR is also deeply negative. Momentum has faded and risk perceptions have shifted dramatically. For now, investors are looking for clearer signs of stability or a catalyst for recovery.

If these policy moves have you thinking beyond RH, it might be the perfect moment to broaden your horizons and discover fast growing stocks with high insider ownership

With RH trading at a steep discount to analyst targets and its shares under pressure, the big question is whether the stock is undervalued after this selloff or if the market is simply factoring in challenging times ahead.

Most Popular Narrative: 38.2% Undervalued

At $162.18 per share, RH trades at a sizable gap below the narrative’s estimated fair value of $262.25. This raises questions about what is fueling this significant disconnect. The current price signals skepticism, but the most popular narrative sees much more upside if its core assumptions hold.

RH's platform expansion, including the opening of 7 Design Galleries and 2 Outdoor Galleries in 2025, is expected to create new opportunities for revenue growth and brand exposure across multiple markets, potentially boosting overall sales revenue. The introduction of new product lines, such as the RH Outdoor Sourcebook and RH Interiors Sourcebook, along with a significant brand extension planned for fall 2025, may enhance product differentiation and drive increased demand, positively impacting future revenues.

Read the complete narrative.

What is the real narrative edge? Underneath these bullish fair value calls are assumptions about major growth from high-end new stores, bold brand extensions, and aggressive product launches. Want to see the precise financial leaps the narrative expects? The numbers behind this story might surprise you.

Result: Fair Value of $262.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, uncertainty around tariffs and weakness in the housing market could continue to put pressure on RH's margins and limit its recovery potential.

Find out about the key risks to this RH narrative.

Another View: Looking Beyond the Headlines

While analysts see major upside, our SWS DCF model points to a drastically higher fair value of $401.37 compared to the current share price. This suggests the market might be significantly underpricing RH’s future cash flows. However, are these forecasts too optimistic given recent headwinds?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own RH Narrative

If the story above doesn’t quite fit your view, or you’d rather dig into the numbers hands-on, you can craft your own take in just a few minutes. Do it your way

A great starting point for your RH research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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