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Is Restoration Hardware (RH) a Great Value Stock Right Now?

Zacks Equity Research
Rogers Communication (RCI) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Restoration Hardware (RH) is a stock many investors are watching right now. RH is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 14.39, while its industry has an average P/E of 15.60. Over the past year, RH's Forward P/E has been as high as 25.36 and as low as 11.77, with a median of 15.84.

RH is also sporting a PEG ratio of 0.82. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. RH's PEG compares to its industry's average PEG of 1.06. Within the past year, RH's PEG has been as high as 1.16 and as low as 0.51, with a median of 0.75.

Value investors will likely look at more than just these metrics, but the above data helps show that Restoration Hardware is likely undervalued currently. And when considering the strength of its earnings outlook, RH sticks out at as one of the market's strongest value stocks.


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