Latest news with #GaryFriedman
Yahoo
25-05-2025
- Business
- Yahoo
3 Monster Growth Stocks That Could Soar 31% to 116%, According to Wall Street
At least one retailer is reporting strong demand for its products despite pressure in the industry. One restaurant chain continues to report impressive growth that could lead to tremendous gains for investors. This e-commerce company is delivering solid growth and expanding into new businesses. 10 stocks we like better than RH › Finding stocks with enormous growth potential that are trading at reasonable valuations is one way to access potentially monster gains in the stock market. Promising consumer brands like RH (NYSE: RH), Cava Group (NYSE: CAVA), and e-commerce specialist Coupang (NYSE: CPNG) are trading at prices that Wall Street analysts see as attractive buying opportunities for investors. Are these stocks truly good buys now? Here's what three contributors think about these companies' prospects. (RH): RH is an upscale furniture retailer. That's not necessarily a great business to be in when the real estate industry is tanking and consumers are cutting back on discretionary spending. RH (formerly Restoration Hardware) operates a varied omnichannel business that includes a limited number of freestanding galleries in upscale neighborhoods, a strong digital presence, and offers several luxury experiences involving restaurants, yachts, jets, and a guesthouse. It's looking to become a top luxury brand rather than a simple furniture seller. Despite the pressure in the economy right now, it's launching new design concepts and opening new galleries. It released 42 new collections over the past few months, and CEO Gary Friedman said that the company is developing a new concept that will expand its market opportunity, coming up for release toward the end of the year. RH's results for the fiscal 2025 fourth quarter (ended Feb. 1) were mixed, with a 10% year-over-year increase in revenue and a 9% increase in operating income. Demand, which measures the dollar value of orders placed, increased 17%, and for the RH brand, it was up 21%. That indicates a strong brand with potential, and it's an impressive feat considering the pressured economy. However, RH came in below Wall Street's expectations for earnings per share by $0.33, which sent its stock plummeting. Friedman originally said the company wouldn't be affected by tariffs on Chinese goods, but it expected uncertainty as the situation remains dynamic. Earnings were released on "Liberation Day," when President Donald Trump announced his tariffs, and management followed that up with an explanation about how it's well diversified with suppliers and doesn't think it's at any disadvantage compared with similar companies. But these are all short-term factors. RH has a strong brand, resilient clientele, and large market opportunity. The average Wall Street analyst price target for the stock over the next 12 to 18 months is 20% higher than it is today, but Barclays analyst Seth Sigman sees it reaching $436, or 116% more than its current price. If conditions improve enough for RH to keep reporting progress and the market climbs on economic optimism, there's a chance that could happen. But even if it doesn't reach that price in the near term, it has a robust long-term outlook. John Ballard (Cava Group): If an investor had put $10,000 in Chipotle stock 15 years ago, those shares would be worth $180,000 today. Those investors caught an up-and-coming restaurant brand before it went mainstream. Cava may provide new investors with a similar opportunity. Cava is carving itself a profitable niche focusing on a Mediterranean-based menu, and it is growing revenue at rates that could send the stock soaring over the next decade. It just reported another strong quarter, with revenue up 28% year over year. Importantly, its favorable restaurant-level economics are already producing a stellar profit margin of 13.7%. This is already above Chipotle's margin and explains why the stock soared last year. Investors are giving Cava a lot of credit for strong traffic trends and a profitable formula for future expansion. That strategy involves using technology to personalize customer communications, increase automation to make its restaurants easier to run, and deliver quality food while maintaining consistency across every location. Wall Street is bullish and rightly so. The consensus rating is currently an overweight buy recommendation with an average price target of $116, implying 36% upside from the current $85 share price. Some analysts have even higher targets on the shares. However, I wouldn't buy the stock expecting it to hit the consensus target in the near term. The stock appears fully valued at the moment, trading at nearly 10 times sales. The high valuation at the previous peak explains why the stock fell to start the year. For perspective, Chipotle shares trade at 6 times sales, although it's not growing nearly as fast as Cava. But I recently took advantage of the dip to start a small position, which I plan to gradually add to as Cava continues to grow. Investors who dollar-cost average into the stock should earn a great return over time. Jeremy Bowman (Coupang): E-commerce stocks like Amazon, MercadoLibre, and Sea Limited have all delivered strong returns, but there's another global e-commerce stock that investors should take a closer look at. Coupang, a U.S-headquartered company becoming the e-commerce leader in South Korea, is delivering impressive growth as it builds out a network of competitive advantages. In the first quarter, revenue ticked up 11% year over year, or 21% on a currency-neutral basis, to $7.9 billion, and margins improved with the gross margin rising 217 basis points to 29.3%. Operating income rose from $114 million to $154 million. Besides e-commerce, Coupang is finding success with new categories it calls Developing Offerings like International, Eats, Play, Fintech, and Farfetch, which rose 67%, or 78% on a currency-neutral basis. It also announced a $1 billion stock repurchase authorization, showing that the company believes its shares are undervalued. The company is starting to get some attention from Wall Street, and one analyst sees the stock having 31% upside. Barclays analyst Jiong Shao raised his price target on Coupang from $35 to $36 following the earnings report and reiterated his overweight rating on the stock. Looking ahead, the stock appears to have significant upside. If margins continue to improve and the tailwinds build in its developing offerings, Coupang should have a bright future. Before you buy stock in RH, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and RH wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $640,662!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $814,127!* Now, it's worth noting Stock Advisor's total average return is 963% — a market-crushing outperformance compared to 168% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jennifer Saibil has positions in MercadoLibre. Jeremy Bowman has positions in Amazon, Cava Group, MercadoLibre, and RH. John Ballard has positions in Cava Group, Coupang, and MercadoLibre. The Motley Fool has positions in and recommends Amazon, MercadoLibre, and Sea Limited. The Motley Fool recommends Barclays Plc, Cava Group, Coupang, and RH. The Motley Fool has a disclosure policy. 3 Monster Growth Stocks That Could Soar 31% to 116%, According to Wall Street was originally published by The Motley Fool
Yahoo
06-04-2025
- Business
- Yahoo
Down 40% in 1 Day, Is It Time to Buy RH Stock on the Dip?
Luxury furniture company RH (NYSE: RH) picked a bad day to report earnings, with its shares plunging 40% the following session as it coincided with President Donald Trump's "Liberation Day" tariff announcements. The stock continued to tumble the next day after China announced retaliatory tariffs and is now down more than 60% year to date, and it's only April. Let's take a close look at the company's recent results to see whether it's time to scoop up shares. On RH's fiscal fourth quarter earnings call, CEO Gary Friedman said the company has been operating in "the worst housing market in almost 50 years." He also said he expects the company to operate in a higher-risk environment this year due to tariffs, market volatility, and inflation. The home furnishing market saw a lot of demand pull forward due to COVID-19, when people spent more time at home. Meanwhile, with the rise in interest rates, there has been a lot less home movement and remodeling, which are when people often look to buy new furniture. At the same time, the company is in the middle of an aggressive European expansion strategy. It's not just testing out these markets but also building massive, elaborate showrooms in expensive locales. It currently has galleries in England (Aynho Park), Germany (Munich and Düsseldorf), Spain (Madrid), and Belgium (Brussels) and plans to open new ones in London and Paris this year. Its first European gallery was built on a 73-acre, 60-room estate in the countryside 75 miles from London. Given their size, location, and grandiosity, RH's galleries are quite expensive to develop. These are often not your typical store openings. RH likes to make statements with its real estate locations. For example, its Boston location was built inside the city's former museum of natural history, and it has a massive 97,000-square-foot location in Newport Beach, California. This company has been an aggressive buyer of its stock in the past, which has saddled it with $2.6 billion in debt. Its leverage (debt/adjusted earnings before interest, taxes, depreciation, or amortization, or EBITDA) was 4.8 times at the end of its fiscal year. That raises the stakes for the company. Meanwhile, RH sources most of its furniture from Asia, the region seeing the biggest tariff increases. That would significantly raise the prices of RH's already quite pricey furniture. It is looking to have 14% of its total production come from the U.S. by year-end. The results themselves were solid in isolation but did miss expectations. Quarterly revenue rose nearly 10% to $812 million, while adjusted earnings per share (EPS) more than doubled to $1.58. Analysts, however, were looking for EPS of $1.09 on sales of $830 million. Gross margins were solid, up 120 basis points to 44.7%, though SG&A (selling, general, and administrative) expenses rose 14% and were 36% of sales, compared to 34.8% of sales last year. Merchandise inventories jumped 35% to $1 billion. Inventory growth far outpacing sales growth would typically be a red flag, although the company argued that being inventory-heavy was a positive with the tariffs. Whether this is true will largely depend on the newness of that inventory or whether it will lead to future discounting if it sits. Looking ahead, the company forecasts full-year revenue growth of between 10% and 13% and Q1 revenue growth of between 12.5% and 13.5%. For a valuation perspective, RH trades at a forward price-to-earnings ratio (P/E) of only 14 times current fiscal year analyst estimates. That's pretty inexpensive for a company expected to grow its revenue by double digits next year. However, tariffs could have a big impact on the "E" part of its forward P/E equation. Tariffs will make its premium-priced furniture much more expensive, while there is also the potential for a recession. The company caters to a wealthier clientele, but even higher-income households have budgets and sometimes cut spending during periods of economics weakness. Meanwhile, the company already carries some pretty hefty leverage, and its EBITDA could come under pressure if its sales struggle. RH already had negative free cash flow last year. Given the size and grandiose nature of its stores, it also has some pretty hefty lease expenses. While RH looks attractive due to its valuation and potential, it also carries some significant risks. As such, I don't consider it a must-buy, but I think interested investors could consider a small position in the stock right now. Before you buy stock in RH, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and RH wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $461,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $578,035!* Now, it's worth noting Stock Advisor's total average return is 730% — a market-crushing outperformance compared to 147% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 5, 2025 Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool recommends RH. The Motley Fool has a disclosure policy. Down 40% in 1 Day, Is It Time to Buy RH Stock on the Dip? was originally published by The Motley Fool Sign in to access your portfolio
Forbes
06-04-2025
- Business
- Forbes
Why RH Believes Tariffs Won't Slow It Down But Work In Its Favor
The ever-optimistic and strikingly transparent RH CEO Gary Friedman and his company took a shellacking this week. During Wednesday's earnings call just an hour after President Trump's reciprocal tariff announcement, he was overheard to say 'Oh S**t!' as RH stock tanked in after-hours trading. RH ended the week with its stock price down nearly 40% and Friedman lost his coveted position on Forbes Billionaire list, plunging from an estimated net worth of $1.2 billion to $750 million. Despite positive earnings results, though the company didn't meet Wall Street's expectations, the impact of tariffs weighed heavily on investors' minds, as did cash flow. Friedman didn't have answers that satisfied, so on Friday the company issued a clarifying statement to reassure investors that tariffs won't slow RH down, rather work in its favor against its competitive set. In a research note, TD Cowen wrote there's a 'lot to unpack' in RH earnings. It reaffirmed RH's position as the leader in the industry, but said it had concerns about future growth with revenue growth slowing. RH's clarification memo was intended to address those concerns, but first, here's a topline on the company's latest report. RH was expecting some pushback after the earnings call, but nothing like it got. The company predicted fiscal 2024 fourth-quarter revenue growth from 18% to 20% and to end the year between 6.8% and 8.2%. Yet it only reached 10% growth in the fourth quarter to $812 million and ended the year up 5% to $3.2 billion. However, fiscal year 2023, ended February 3, 2024, had an additional week, so on a comparative 13-week and 52-week basis, RH would have hit the lower-end of guidance. Comparable net revenues rose 18% and year-end was up 6.8%. End of year net income disappointed too. While net income rose 22% in the quarter to $13.9 million, RH annual net income dropped 43% to $72.4 million. Stressing that that housing market is still under pressure with mortgage rates spiking mid-December and mortgage applications falling, Friedman said the company is 'performing at a level most would expect in a robust housing market' and emphasized RH is 'outperforming other home furnishings businesses by a wide margin.' Yet guidance was subdued. First quarter is projected to grow in the 10% to 13% range to end the year up between 12.5% to 13.5%. This despite planned openings of seven Design Galleries, two Outdoor Galleries with one slated for the East Hamptons this summer and two more expansive New Concept Galleries, including one in the former Ralph Lauren building in Greenwich, CT. And while its Paris opening is still scheduled for 2025, London will be delayed until 2026 with Italy opening the same year. Regarding the tariff question, Friedman stated in the earnings call, 'We do not expect a negative impact to results related to previously announced increased tariffs on products from China, Canada or Mexico.' He also added that the company has doubled its North Carolina factory's capacity to produce upholstered furniture, projecting that about 48% will be produced there, bringing a total of 14% of its overall business to U.S. production by the end of the year. In the earnings call, he emphasized that virtually every competitor of any scale in the home space is heavily reliant on Asia for manufacturing. However, he also noted that RH has been strategically moving production out of China to Vietnam, Indonesia, Cambodia and other Asian countries and it is holding between $200 and $300 million in pre-tariff inventory that puts it at competitive advantage. During the call, he expressed support of the Trump administration's tariff moves. 'We've never seen an administration and a leader like Trump. I mean, it's impressive, quite frankly,' he said. 'There may be pain for the next 12 months to 18 months or 24 months -- but I think the second half of this administration's tenure could be a booming American economy.' This candid support must have caught many off guard, as he referenced what's happening to Tesla twice on the call. Yet, in the clarification statement after the earnings call, he had an I-told-you so moment. 'RH believes President Trump is using the significant tariffs as a tool to accelerate negotiations with an intent to improve and balance trade conditions around the world,' it stated and added, 'The Company believes this appears to be working.' This was a reference to the President's Truth Social post about a call from Vietnam earlier in the day that said it wants an agreement to reduce tariffs to zero. If such an agreement is secured, the company's sourcing in Vietnam will be 'accretive to margins.' The company also used the clarification note to emphasize that demand growth remains strong through the first part of the year. In the earnings call, Friedman reported that after demand softened in mid-December, it came back to 19% growth in January through the Feb. 1 end of quarter for its RH Brand, specifically RH Interiors, RH Modern, RH Contemporary and RH Outdoor. He also reminded investors the company planned to only report demand over last year and would not continue reporting it this year, due to the 'product transformation and the dislocation between demand and revenues.' However, because of the market's extreme volatility, the company has reversed course and will continue to report demand on a quarter-by-quarter basis. Through the first two months of the quarter, overall demand is up 17% and the RH Brand demand has improved 20%. The company's steep decline in cash flow over fiscal 2024 was another sticking point during earnings. It dropped from $123.7 million previous year to $30.4 million. Friedman reassured investors, 'The cash flow is going to be strong this year,' and added 'We've got real estate assets we can turn into cash.' But that didn't stifle concerns, so the clarification memo provided a free-cash-flow outlook for fiscal 2025 in the range between $250 million and $350 milion. In the updated announcement, RH stressed no major furniture or outdoor furniture retailer has 'any material sourcing advantages based on the current announcements,' and pointed out it is more transparent than other public furniture retailers in reporting the countries it sources product from. The company believes its transparency will work to its advantage with investors going forward, as it becomes clear that 'RH does not have any more market or financial risk than other higher end furniture based retailers.' While Friday's clarification announcement was in good corporate speak without Friedman's lyrical touches, he had plenty of those to share during the earnings call. 'It is not the critic who counts; not the man or woman who points out how the strong man stumbles or the doer of deeds could have done better,' he said, quoting President Theodore Roosevelt. 'The credit belongs to the man or woman who is actually in the arena. Whose face is marred by dust and sweat and blood.' Friedman and RH may have come out of last week bloodied and bruised, but he affirmed the company does best when it is under pressure. 'We have a history of really performing in times of crisis and thriving in those times and have the ability to improvise, adapt, and overcome,' he shared in the earnings call. 'At our core, we are innovators. We're not duplicators. We're leaders. We're not managers. We're visionaries and we're not victims. 'So whether it's like a confused or conflicted consumer environment because of high interest rates or new tariffs or trade wars or military wars. I mean there's always something -- so look, we feel confident no matter what the environment looks like,' he concluded. See also:
Yahoo
04-04-2025
- Business
- Yahoo
‘Oh really? Oh s—.' CEO reacts live to tariff-based stock plunge on earnings call
The CEO of was caught off guard by the impact of tariffs on his company's stock. On an earnings call, Gary Friedman expressed shock at the amount shares fell. RH is particularly exposed to tariffs, as it sources much of its product from Asia. RH CEO Gary Friedman was already having a bad day Wednesday before details of Donald Trump's Liberation Day were announced. Earnings for the luxury-furniture retailer (which changed its name from Restoration Hardware in 2017) were disappointing, coming in well below analyst expectations. That hurt the company's share price, but then, in the middle of the earnings call, Trump's tariffs were announced—and shares really began to crater. Friedman's reaction was not that of a typical CEO. "Oh really? 'Oh, s---. OK," he said. "I just looked at the screen. I hadn't looked at it. It got hit when I think the tariffs came out. And everybody can see in our 10-K where we're sourcing from, so it's not a secret, and we're not trying to disguise it by putting everything in an Asia bucket.' This embedded content is not available in your region. RH is reliant on Asian manufacturing partners, which means it could be impacted more than some other firms by tariffs. Given that the retailer's prices are already at a premium level, that could scare away customers, further impacting revenues. In the fourth quarter of 2024, RH reported earnings per share of $1.58, far short of the $1.92 analysts were predicting. Revenue also fell short of expectations. While his company is at risk of significant impact of the tariffs, Friedman expressed support for Trump and his plan, noting he didn't think the tariffs would be at this level for an extended period. 'Leverage is how you win negotiations, not bluffing,' Friedman said. 'My view is, I don't think these tariffs are going to completely stick. I think if you're these other countries, you're going to start playing the few cards you have.' He argued that tariffs would be 'a really good thing long term.' This story was originally featured on Sign in to access your portfolio
Yahoo
04-04-2025
- Business
- Yahoo
Puzzled CEOs struggle to navigate Trump's new world
'Oh sh*t,' Restoration Hardware CEO Gary Friedman said upon learning that his shares were down 30% after the White House made its Liberation Day splash. 'I just looked at the screen.' His comments, on a live earnings call with stock analysts, captured the feeling in the business world, which was shocked by the arrival of tariffs that President Donald Trump has talked nonstop about for more than a year. Flashback to January, when executives were bankrolling inauguration parades, literally hugging flags, and shouting into the nearest microphone what a bright moment it was for America. It wasn't just their MAGA conversion that struck me, but how unshackled they felt expressing it. 'It's fascinating,' I wrote at the time, 'to watch everyone say the quiet part out loud.' Fast-forward three months and it's now the loud part, whispered despondently. , murmur CEOs with thousand-yard stares, as if what's happening now was some sort of edge case that couldn't have been predicted. Coming into his second term, the business community believed that Trump cared enough about the stock market to tone down his more aggressive policies. When he backed off criticisms of Federal Reserve Chair Jerome Powell, which had rattled investors, executives took it as confirmation of what they badly wanted to be true. The writing was on the wall, though, in Trump's tepid response to the DeepSeek freakout. It should have been a political gimme — bashing China for copycat tech practices that wiped out trillions of dollars of US stock-market value — but instead the president used it as a chance to make the case for American self-sufficiency. 'We need to be laser focused on competing,' he said. In his first term, Trump often mistook the stock market for the economy in ways that drove the business community crazy. He has now corrected that error at the worst possible moment. A rising stock market doesn't necessarily translate into broader economic growth. The gains are mostly on paper and mostly flow to people who are already rich, and much depends on whether companies that tap higher prices for cash do productive things with it. But a falling one can bring on a recession in a hurry — nine of the 14 bear markets since World War II have been followed by a shrinking economy. More troubling for business leaders is that the basic barter system that has driven the Trump administration's policies so far seems to have broken down. Israel preemptively canceled all its tariffs on US goods earlier this week, hoping to be spared. It wasn't. India Prime Minister Narendra Modi's cozy relationship with Trump — remember the 'Howdy, Modi!' rally? — had no effect. The lesson from Trump's first 73 days was that everything can be bought. Paul Weiss' price for peace was $40 million. ABC News' was $15 million. But that naked commercialism may be cracking, too. Chevron adopted Trump's 'Gulf of America' language, but got no obvious help with its Venezuelan drilling concession mess. Pfizer's decision to patronize Mar-a-Lago, and its CEO's Biden-bashing, haven't dented Trump's enthusiasm for gutting health care research or reopening vaccine probes. CEOs were blinded by the lesson they took from Trump's first term to take him 'seriously, but not literally,' writes The Dispatch's Nick Catoggio. They dismissed his increasingly specific tariff talk as 'protectionist boob bait for the bubbas designed to get him reelected, not a serious trade Politico's of the problem is, essentially, that Wall Street looked at Scott Bessent and saw Steven Mnuchin. No government official in recent memory has surprised the business community more to the upside than Trump's first Treasury Secretary, who steered the economy through the pandemic with a mix of textbook market moves and a surprising ability to manage up. The corporate world saw Bessent, a longtime trader, as one of their own, but 'he definitely has not played the role to date that the markets had expected,' Sarah Bianchi, a senior managing director at investment bank advisory firm Evercore ISI, told the magazine. 'It's too bad nobody on Wall Street can afford to buy a newspaper subscription,' Jeff Stein, the Washington Post's chief economics correspondent. Sign in to access your portfolio
