Financial Review: RH (NYSE:RH) and Hennes & Mauritz (OTCMKTS:HNNMY)

Hennes & Mauritz (OTCMKTS:HNNMY) and RH (NYSE:RH) are both consumer discretionary companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, valuation, risk and profitability.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Hennes & Mauritz and RH, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hennes & Mauritz	3	4	0	0	1.57
RH	3	9	7	0	2.21

RH has a consensus target price of $164.86, indicating a potential upside of 40.71%. Given RH’s stronger consensus rating and higher probable upside, analysts clearly believe RH is more favorable than Hennes & Mauritz.

Profitability

This table compares Hennes & Mauritz and RH’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hennes & Mauritz	5.94%	33.62%	7.94%
RH	3.23%	132.79%	1.63%

Insider and Institutional Ownership

0.0% of Hennes & Mauritz shares are owned by institutional investors. Comparatively, 90.2% of RH shares are owned by institutional investors. 26.9% of RH shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk and Volatility

Hennes & Mauritz has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500. Comparatively, RH has a beta of 1.91, meaning that its stock price is 91% more volatile than the S&P 500.

Earnings & Valuation

This table compares Hennes & Mauritz and RH”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hennes & Mauritz	$23.01 billion	0.97	$1.23 billion	$0.17	18.65
RH	$3.45 billion	0.64	$124.79 million	$5.62	20.85

Hennes & Mauritz has higher revenue and earnings than RH. Hennes & Mauritz is trading at a lower price-to-earnings ratio than RH, indicating that it is currently the more affordable of the two stocks.

Summary

RH beats Hennes & Mauritz on 9 of the 14 factors compared between the two stocks.

About Hennes & Mauritz

H & M Hennes & Mauritz AB (publ) provides clothing, accessories, footwear, cosmetics, home textiles, and homeware for women, men, and children worldwide. It offers sportswear, shoes, bags, beauty products, activewear, jeans, and ready-to-wear; and interior products, including bed linens, dinnerware, textiles, furniture, and lighting. The company provides its products under the H&M, H&M HOME, H&M Move, H&M Beauty, COS, Weekday, Monki, & Other Stories, ARKET, Afound, and Singular Society brand names. In addition, it operates Sellpy, a broad digital platform for second-hand fashion and other products; and Creator Studio, a global platform for merchandise design and production, as well as provides solutions to extend the useful life of unwanted garments through reuse and recycling under Looper Textile name. The company offers its products through online and physical stores. H & M Hennes & Mauritz AB (publ) was incorporated in 1943 and is headquartered in Stockholm, Sweden.

About RH

RH, together with its subsidiaries, operates as a retailer in the home furnishings market. The company offers products in various categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, baby, child, and teen furnishings. It provides its products through rh.com, rhbabyandchild.com, rhteen.com, rhmodern.com, and waterworks.com online channels, as well as operates RH Galleries, RH outlet stores, RH Guesthouse, and Waterworks showrooms in the United States, Canada, the United Kingdom, and Germany. The company was formerly known as Restoration Hardware Holdings, Inc. and changed its name to RH in January 2017. RH was incorporated in 2011 and is headquartered in Corte Madera, California.