I was looking at the biggest stock losers from the initial blow of Trump’s tariffs and Restoration Hardware led the list with a 40 percent drop.
This high end furniture retailer sources most of its product from China and Vietnam which are hit hard with tariffs.
Is it a deal if the tariffs end?
LOL. Stock prices depend on what others are willing to pay so it doesn’t matter what the company’s actual value is – but I think it’s a turd.
The stock has lost 66% of its value in 3 months so it was already in a serious slide.
The PE ratio is an expensive 40 (!) AFTER the massive 40 percent price drop. Ouch.
RH does not pay dividends. But it apparently just blew $2 billion on stock buybacks to pump the stock price – a tactic by poor management that never works as the stock usually just keeps dropping. Stock buybacks are often just a way to put more stock back in the company which is then paid back out to the executives as extra compensation.
In my book no dividends but stock buybacks is a sign of a bad company to avoid.
Looking at the website and what it sells – yuck. Opinions vary, but I’ve never seen such a collection of massively overpriced simplistic and boring furniture. BORING. Definitely NOT luxury. Definitely NOT unique to create a statement in your home. Did I mention massively overpriced.
So do I think Restoration Hardware is a company to invest in? No. Could the stock have a massive pop if tariffs end? Yes – but only because the stock dropped so lunatic investors will buy … just because. But there isn’t a big upside to this business that would create a surge of orders. It’s not that type of the business and the product selection is meh to begin with.
The best I could suggest if you think this stock has bottomed and tariffs will end is to buy, wait for the quick post-tariff bounce, then sell quickly. There is no long term play here, especially since no dividends are paid.
Sales have been dropping for years but expenses remain static so profit has been dropping. There’s a zillion better places to put your money.
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