RH (MEX:RH) ROC % : 8.43% (As of Oct. 2024)

View and export this data going back to 2013. Start your Free Trial

What is RH ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. RH's annualized return on capital (ROC %) for the quarter that ended in Oct. 2024 was 8.43%.

As of today (2024-12-13), RH's WACC % is 13.48%. RH's ROC % is 10.28% (calculated using TTM income statement data). RH earns returns that do not match up to its cost of capital. It will destroy value as it grows.

RH ROC % Historical Data

The historical data trend for RH's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

RH ROC % Chart

RH Annual Data

Trend

Jan15

Jan16

Jan17

Jan18

Jan19

Jan20

Jan21

Jan22

Jan23

Jan24

ROC %

Get a 7-Day Free Trial

11.82

13.43

27.15

25.13

8.09

RH Quarterly Data
	Jan20	Apr20	Jul20	Oct20	Jan21	Apr21	Jul21	Oct21	Jan22	Apr22	Jul22	Oct22	Jan23	Apr23	Jul23	Oct23	Jan24	Apr24	Jul24	Oct24
ROC %	Get a 7-Day Free Trial															-0.35	12.31	2.12	9.52	8.43

RH ROC % Calculation

RH's annualized Return on Capital (ROC %) for the fiscal year that ended in Jan. 2024 is calculated as:

	ROC % (A: Jan. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jan. 2023 )	+	Invested Capital (A: Jan. 2024 ))	/ count )
=	6287.709 * ( 1 - 16.95% )	/	( (65765.254	+	63408.588)	/ 2 )
=	5221.9423245	/	64586.921
=	8.09 %

where

	Invested Capital		(A: Jan. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	99804.015	-	5689.478	-	( 28349.283	-	max(0, 16654.52	-	47233.058	+	28349.283	))
=	65765.254

	Invested Capital		(A: Jan. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	71176.404	-	5643.326	-	( 2124.49	-	max(0, 14992.555	-	18926.489	+	2124.49	))
=	63408.588

RH's annualized Return on Capital (ROC %) for the quarter that ended in Oct. 2024 is calculated as:

	ROC % (Q: Oct. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jul. 2024 )	+	Invested Capital (Q: Oct. 2024 ))	/ count )
=	8130.184 * ( 1 - 21.11% )	/	( (71655.74	+	80484.803)	/ 2 )
=	6413.9021576	/	76070.2715
=	8.43 %

where

	Invested Capital		(Q: Jul. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	81390.025	-	8277.487	-	( 1456.798	-	max(0, 18793.778	-	22675.616	+	1456.798	))
=	71655.74

	Invested Capital		(Q: Oct. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	89424.616	-	7196.841	-	( 1742.972	-	max(0, 17953.483	-	25595.141	+	1742.972	))
=	80484.803

Note: The Operating Income data used here is four times the quarterly (Oct. 2024) data.

RH (MEX:RH) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, RH's WACC % is 13.48%. RH's ROC % is 10.28% (calculated using TTM income statement data). RH earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

RH ROC % Related Terms

Thank you for viewing the detailed overview of RH's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.

RH Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » RH (MEX:RH) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

RH:USA 0KTF:UK RS1:Germany RS1:Germany R2HH34:Brazil

Address

15 Koch Road, Suite K, Corte Madera, CA, USA, 94925

Website

https://www.restorationhardware.com

RH is a luxury furniture and lifestyle retailer operating in the $134 billion domestic furniture and home furnishing industry. The firm offers merchandise across many categories including furniture, lighting, textiles, bath, decor, and children and is growing the presence of its hospitality business with 18 restaurant locations. RH innovates, curates, and integrates products, categories, services, and businesses across channels and brand extensions (RH Modern and Waterworks, for example). RH is fully integrated across channels and is positioned to broaden its addressable market over the next decade by expanding abroad, with its World of RH digital platform (highlighting offerings outside of home furnishings), and with offerings in color, bespoke furniture, architecture, media, and more.