Head-To-Head Review: Rent the Runway (NASDAQ:RENT) vs. RH (NYSE:RH)

RH (NYSE:RH) and Rent the Runway (NASDAQ:RENT) are both consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, dividends, earnings, profitability and institutional ownership.

Risk and Volatility

RH has a beta of 1.92, meaning that its share price is 92% more volatile than the S&P 500. Comparatively, Rent the Runway has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500.

Insider & Institutional Ownership

90.2% of RH shares are held by institutional investors. Comparatively, 73.1% of Rent the Runway shares are held by institutional investors. 26.9% of RH shares are held by insiders. Comparatively, 0.4% of Rent the Runway shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares RH and Rent the Runway’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RH	3.23%	132.79%	1.63%
Rent the Runway	11.80%	N/A	-21.89%

Valuation & Earnings

This table compares RH and Rent the Runway”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RH	$3.44 billion	0.72	$124.79 million	$5.62	23.34
Rent the Runway	$366.90 million	0.20	$22.60 million	$12.66	0.17

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

Analyst Ratings

This is a summary of current ratings and target prices for RH and Rent the Runway, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RH	3	9	7	0	2.21
Rent the Runway	1	0	0	0	1.00

RH currently has a consensus price target of $163.00, indicating a potential upside of 24.27%. Given RH’s stronger consensus rating and higher probable upside, analysts plainly believe RH is more favorable than Rent the Runway.

Summary

RH beats Rent the Runway on 12 of the 14 factors compared between the two stocks.

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.

About Rent the Runway

Rent the Runway, Inc. operates shared designer closet in the United States. The company offers evening wear and accessories, ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear, and ski wear under subscription, rental, and resale offering. It also engages in the software development and support activities. Rent the Runway, Inc. was incorporated in 2009 and is headquartered in Brooklyn, New York.