Name: RH (NYSE:RH) | Price to FCFE (P/FCFE)
Creator: Stock Analysis on Net

Price to FCFE (P/FCFE)

Free Cash Flow to Equity (FCFE)
P to FCFE Ratio, Current
P to FCFE Ratio, Historical

Free Cash Flow to Equity (FCFE)

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RH, FCFE calculation

US$ in thousands

12 months ended:	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Net income	528,642)	688,546)	271,815)	220,375)	150,639)	2,180)
Net noncash charges	373,444)	252,316)	335,735)	199,356)	190,761)	215,592)
Change in assets and liabilities	(498,399)	(278,748)	(106,780)	(80,543)	(40,844)	337,330)
Net cash provided by operating activities	403,687)	662,114)	500,770)	339,188)	300,556)	555,102)
Capital expenditures	(173,642)	(185,383)	(111,126)	(93,623)	(136,736)	(112,455)
Borrowings under asset based credit facility	—)	—)	359,401)	322,500)	866,500)	600,000)
Repayments under asset based credit facility	—)	—)	(359,401)	(380,000)	(1,008,970)	(400,030)
Borrowings under term loans	500,000)	2,000,000)	—)	320,000)	—)	180,000)
Repayments under term loans	(21,250)	(5,000)	—)	(324,000)	(80,000)	(100,000)
Borrowings under real estate loans	16,000)	—)	—)	—)	—)	—)
Repayments under real estate loans	(10)	—)	—)	—)	—)	—)
Borrowings under promissory and equipment security notes	—)	—)	12,857)	122,000)	—)	34,000)
Repayments under promissory and equipment security notes	(13,863)	(22,949)	(34,456)	(16,520)	(31,974)	(2,319)
Proceeds from issuance of convertible senior notes	—)	—)	—)	350,000)	335,000)	—)
Purchase of convertible note hedges	—)	—)	—)	(91,350)	(91,857)	—)
Debt issuance costs related to convertible senior notes	—)	—)	—)	(4,818)	(6,349)	—)
Repayments of convertible senior notes	(13,064)	(335,729)	(215,846)	(278,560)	—)	—)
Repayment under convertible senior notes repurchase obligation	(395,372)	—)	—)	—)	—)	—)
Debt extinguishment costs	(8,059)	—)	—)	—)	—)	—)
Debt issuance costs	(28,069)	(26,411)	—)	(4,636)	—)	(8,298)
Principal payments under finance lease agreements, net of tenant allowances	(10,146)	(14,158)	(12,498)	(9,682)	—)	(377)
Proceeds from termination of convertible senior note hedges	231,796)	—)	—)	—)	—)	—)
Free cash flow to equity (FCFE)	488,008)	2,072,484)	139,701)	250,499)	146,170)	745,623)

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

The cash flow profile exhibits significant volatility in both operating performance and equity-available cash flows over the six-year period ending January 28, 2023. While operating cash flows followed a general recovery arc peaking in 2022, free cash flow to equity (FCFE) displayed extreme fluctuations that diverged sharply from operational trends.

Operating Cash Flow Trends: Net cash provided by operating activities experienced a notable decline from 555.1 million in 2018 to 300.6 million in 2019. A consistent recovery period followed, with values rising annually to reach a peak of 662.1 million in 2022. This growth trend reversed in the final period, with operating cash flows contracting to 403.7 million by January 28, 2023.
Free Cash Flow to Equity (FCFE) Analysis: FCFE demonstrated high instability, characterized by a sharp drop from 745.6 million in 2018 to 146.2 million in 2019. Following a period of relative stagnation through 2021, an anomalous spike occurred in 2022, where FCFE surged to 2.07 billion. This represents an exceptional outlier in the data series, as the value returned to 488.0 million in 2023, indicating a normalization of cash flows available to shareholders.
Divergence Between Operations and Equity Cash Flow: The relationship between operating cash flow and FCFE suggests significant financing or investing activities. Between 2019 and 2021, FCFE remained consistently below operating cash flow, suggesting that capital expenditures or debt repayments absorbed a portion of operational gains. In contrast, the 2022 fiscal year showed a massive divergence where FCFE exceeded operating cash flow by approximately 1.41 billion, implying a substantial influx of cash from net borrowing or asset sales. By 2023, FCFE again exceeded operating cash flow, though the margin of divergence narrowed significantly.

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Price to FCFE Ratio, Current

RH, current P/FCFE calculation, comparison to benchmarks

No. shares of common stock outstanding	22,052,211
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in thousands)	488,008)
FCFE per share	22.13
Current share price (P)	246.82
Valuation Ratio
P/FCFE	11.15
Benchmarks
P/FCFE, Competitors¹
Amazon.com Inc.	132.83
Home Depot Inc.	25.09
Lowe’s Cos. Inc.	10.59
TJX Cos. Inc.	31.00
P/FCFE, Sector
Consumer Discretionary Distribution & Retail	62.82
P/FCFE, Industry
Consumer Discretionary	45.20

Based on: 10-K (reporting date: 2023-01-28).

¹ Click competitor name to see calculations.

If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.

Price to FCFE Ratio, Historical

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RH, historical P/FCFE calculation, comparison to benchmarks

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
No. shares of common stock outstanding¹	22,045,437	21,708,771	20,996,817	19,238,681	20,478,213	21,518,618
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in thousands)²	488,008)	2,072,484)	139,701)	250,499)	146,170)	745,623)
FCFE per share³	22.14	95.47	6.65	13.02	7.14	34.65
Share price^1, 4	245.71	334.28	600.00	118.00	102.95	95.28
Valuation Ratio
P/FCFE⁵	11.10	3.50	90.18	9.06	14.42	2.75
Benchmarks
P/FCFE, Competitors⁶
Amazon.com Inc.	84.16	240.95	—	—	—	—
Home Depot Inc.	19.60	19.87	15.41	—	—	—
Lowe’s Cos. Inc.	7.08	13.55	12.28	—	—	—
TJX Cos. Inc.	33.59	—	10.55	—	—	—
P/FCFE, Sector
Consumer Discretionary Distribution & Retail	41.58	51.89	59.10	—	—	—
P/FCFE, Industry
Consumer Discretionary	30.88	36.45	83.41	—	—	—

¹ Data adjusted for splits and stock dividends.

² See details »

³ 2023 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 488,008,000 ÷ 22,045,437 = 22.14

⁴ Closing price as at the filing date of RH Annual Report.

⁵ 2023 Calculation
P/FCFE = Share price ÷ FCFE per share
= 245.71 ÷ 22.14 = 11.10

⁶ Click competitor name to see calculations.

The Price to Free Cash Flow to Equity (P/FCFE) ratio demonstrates significant instability between February 2018 and January 2023, characterized by extreme swings in market valuation relative to cash flow generation. The ratio transitioned from highly compressed levels to an extreme peak before returning to a more moderate range.

Market Price Movement: A substantial upward trajectory in share price is observed leading up to January 2021, where the price peaked at $600.00. This peak was followed by a consistent decline over the subsequent two years, closing at $245.71 in January 2023.
FCFE per Share Performance: Cash flow to equity per share showed erratic behavior, with a notable decline following 2018. A significant surge occurred in January 2022, reaching $95.47, which represents the highest cash flow generation in the analyzed period, though it retreated to $22.14 by January 2023.
Valuation Interpretation: The P/FCFE ratio peaked at 90.18 in January 2021, marking a period where the share price was severely decoupled from the underlying FCFE. The ratio experienced sharp contractions in 2018 (2.75) and 2022 (3.50), indicating periods where the market price was low relative to the capacity to generate free cash flow for equity holders.

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