RH (NYSE:RH)

Price to earnings (P/E) ratio

The P/E ratio exhibited extreme volatility over the observed period. Initially, it was exceptionally high at 940.5, which then dramatically declined to 14 in the following year. Subsequently, it decreased further to a low of 10.3, before rising sharply to 46.35. In the final two years, the ratio stabilized around 10.5 and 10.25, indicating a substantial correction from the earlier spikes and a possible normalization of earnings valuation.

Price to operating profit (P/OP) ratio

The P/OP ratio showed a decreasing trend from 15.62 down to 6.26 over the first three years, suggesting improving operating profit multiples or valuation adjustments. However, in the fourth year, there was a notable surge to 26.98, indicating either increased market valuation or a temporary dip in operating profit. In the last two years, the ratio returned closer to previous lower levels at around 7.5 to 7.83, reflecting a reversion toward longer-term normative values.

Price to sales (P/S) ratio

The P/S ratio remained relatively stable near 0.84 to 0.86 during the first three years. A significant increase occurred in the fourth year to 4.42, followed by a sharp decline to 1.93 and then 1.51 in the last two years. This pattern suggests a temporary surge in sales valuation that was not sustained, with subsequent years showing a reversion toward more moderate valuation levels.

Price to book value (P/BV) ratio

Data for the P/BV ratio became available starting from the third year, where it reached an extraordinarily high value of 121.72. This was followed by a substantial decrease over the next three years to 28.18, then further down to 6.2, and a slight increase to 6.9 in the final year. The marked decline indicates a significant correction in market valuation relative to book value, moving from highly inflated levels to more conventional multiples.

Share Price

The share price demonstrated a significant increase from US$95.28 in early 2018 to a peak of US$600 by February 2020. However, it experienced notable volatility thereafter, rising sharply to US$334.28 by early 2021 but then declining to US$245.71 by early 2023. Overall, the trend reflects substantial growth over the six-year period with considerable fluctuations in the later years.

Earnings per Share (EPS)

EPS showed a strong upward trend from a very low base of US$0.10 in early 2018 to US$31.72 in early 2022. This indicates substantial improvement in profitability over the period. However, EPS declined to US$23.98 by early 2023, suggesting a reduction in earnings during the most recent year, though it remains significantly higher than earlier years.

Price-to-Earnings (P/E) Ratio

The P/E ratio started at an unusually high level of 940.5 in early 2018, reflecting very low earnings relative to the share price at that time. It then normalized to a range between approximately 10 and 14 for most of the period, except for a spike to 46.35 in early 2021. The elevated P/E ratios in 2021 may reflect market expectations of future earnings growth or temporary earnings fluctuations. By early 2023, the P/E ratio settled around 10.25, indicating a return to more typical valuation levels.

Overall Analysis

The data points to considerable growth in both share price and earnings over the six-year period, with some periods of volatility in valuation metrics. The large increase in EPS until 2022 suggests significant operational improvements or increased profitability. The decline in both share price and EPS in the latest year could indicate emerging challenges or market corrections. The fluctuating P/E ratio underscores varying investor sentiment and changing expectations for future growth.

The financial data indicates notable fluctuations in share price, operating profit per share, and the price-to-operating profit (P/OP) ratio over the analyzed periods.

Share Price

From February 2018 to February 2020, the share price showed a steady increase from $95.28 to $118, followed by a significant surge to $600 in January 2021, marking the peak value in the dataset. However, after this peak, a sharp decline occurred in the subsequent years, with the share price falling to $334.28 in January 2021 and further decreasing to $245.71 by January 2023.

Operating Profit per Share

The operating profit per share demonstrated consistent growth from $6.10 in February 2018 to $42.71 in January 2022. After reaching this high point, the figure declined to $32.76 in January 2023, indicating a recent decrease in operational profitability on a per-share basis.

Price-to-Operating Profit (P/OP) Ratio

The P/OP ratio initially decreased from 15.62 in 2018 to a low of 6.26 in 2020, suggesting the market valuation relative to operating earnings became more favorable during this period. There was a sharp increase to 26.98 in 2021, corresponding with the spike in share price, followed by a reduction to values around 7.5 in the final years, indicating stabilization but at a higher valuation multiple compared to the pre-peak period.

Overall, the data reflects a period of strong operational performance growth culminating around early 2022, accompanied by a pronounced but brief peak in share price and market valuation multiples in early 2021. The subsequent declines in share price and operating profit per share suggest increased volatility and potential challenges following this peak. The P/OP ratio's behavior implies shifts in market sentiment and valuation efficiency across the analyzed years.

Share Price Trend

The share price experienced a significant upward trajectory over the analyzed period. Beginning at $95.28 in early 2018, it rose steadily to $118.60 by early 2020. A substantial surge occurred in 2021, with the price reaching $600.33, indicating heightened market valuation during that year. However, subsequent years showed a decline, with the price falling to $334.28 in early 2022 and further to $245.71 by early 2023, suggesting a correction or market adjustment following the peak.

Sales Per Share Development

Sales per share demonstrated moderate growth from $113.40 in 2018 to $137.61 in 2020. A slight dip was noted in 2021 when sales per share decreased to $135.67. Following this, there was a notable increase to $173.15 in 2022, representing the highest level recorded in the period. The last year saw a decrease to $162.87, indicating some volatility while maintaining relatively high sales performance compared to earlier years.

Price-to-Sales (P/S) Ratio Movement

The P/S ratio remained relatively stable and low from 2018 through 2020, hovering around 0.84 to 0.86. In 2021, the ratio spiked dramatically to 4.42, coinciding with the peak in share price that year, and suggesting that the market valued the stock much more richly relative to its sales. However, in the two subsequent years, the P/S ratio declined sharply to 1.93 in 2022 and further to 1.51 in 2023, reflecting a normalization of valuation relative to sales despite the sales per share remaining relatively strong.

Overall Insights

The data reveals a period of rapid share price escalation culminating in 2021, followed by a correction phase. Sales per share showed overall growth with some fluctuations, peaking in 2022. The P/S ratio indicates that market sentiment and valuation significantly heightened in 2021 before adjusting downward, suggesting that the elevated share prices in that year may have been driven more by investor expectations than proportional sales growth. This pattern highlights a phase of exuberance followed by stabilization in market perception.

Share Price

The share price exhibited a generally upward trend over the analyzed period, increasing from $95.28 in early 2018 to a peak of $600 in early 2020. Subsequently, the price surged significantly in early 2021 to $334.28, before experiencing a decline to $245.71 by early 2023. Overall, despite some volatility, the share price demonstrated substantial growth relative to the initial value.

Book Value per Share (BVPS)

The book value per share showed considerable improvement over the period. Initially negative at -$0.34 in 2018 and worsened to -$1.12 in 2019, the BVPS turned positive by 2020, reaching $0.97. This positive momentum continued with a sharp increase in 2021 to $21.29 and further growth to a peak of $53.91 in 2022, followed by a decline to $35.59 in 2023. This progression indicates a strengthening in the company's net asset value per share over time.

Price-to-Book Value (P/BV) Ratio

The P/BV ratio data available from 2020 onward shows a high valuation relative to book value in 2020 with an extremely elevated ratio of 121.72, suggesting the market price was substantially above the book value per share at that time. The ratio declined significantly to 28.18 in 2021, and further to single-digit multiples of 6.2 in 2022 and 6.9 in 2023, indicating that the share price became more aligned with the company’s book value. This trend reflects a normalization in valuation multiples after very high market exuberance in 2020.