Critical Survey: RH (NYSE:RH) versus WD-40 (NASDAQ:WDFC)

RH (NYSE:RH) and WD-40 (NASDAQ:WDFC) are both mid-cap consumer staples companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, profitability, valuation, dividends and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings for RH and WD-40, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RH	5	8	7	0	2.10
WD-40	0	1	2	0	2.67

RH currently has a consensus price target of $175.13, suggesting a potential upside of 42.30%. WD-40 has a consensus price target of $270.00, suggesting a potential upside of 34.08%. Given RH’s higher probable upside, analysts clearly believe RH is more favorable than WD-40.

Valuation & Earnings

This table compares RH and WD-40″s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RH	$3.44 billion	0.68	$124.79 million	$6.31	19.50
WD-40	$619.98 million	4.37	$90.99 million	$5.88	34.25

RH has higher revenue and earnings than WD-40. RH is trading at a lower price-to-earnings ratio than WD-40, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares RH and WD-40’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RH	3.63%	-567.82%	2.62%
WD-40	12.57%	30.23%	17.15%

Volatility and Risk

RH has a beta of 1.89, meaning that its stock price is 89% more volatile than the S&P 500. Comparatively, WD-40 has a beta of 0.33, meaning that its stock price is 67% less volatile than the S&P 500.

Insider and Institutional Ownership

90.2% of RH shares are owned by institutional investors. Comparatively, 91.5% of WD-40 shares are owned by institutional investors. 26.9% of RH shares are owned by insiders. Comparatively, 0.8% of WD-40 shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

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 WD-40

WD-40 Company develops and sells maintenance products, and homecare and cleaning products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company provides multi-purpose maintenance products that include aerosol sprays, non-aerosol trigger sprays, precision pens, and in liquid-bulk form products under the WD-40 Multi-Use brand name; specialty maintenance products, such as penetrants, degreasers, corrosion inhibitors, greases, lubricants, and rust removers under the WD-40 Specialist brand; and bike-specific products. It also offers multi-purpose and specialty drip oils, and spray lubricant products, as well as other specialty maintenance products under the 3-IN-ONE brand name; and professional spray maintenance products and lubricants for the bike maintenance market under the GT85 brand name. In addition, the company provides automatic toilet bowl cleaners under the 2000 Flushes brand name; aerosol and liquid trigger carpet stain and odor eliminators under the Spot Shot brand; room and rug deodorizers under the Carpet Fresh brand name; carpet and household cleaners, and rug and room deodorizers under the 1001 brand; heavy-duty hand cleaner products under the Lava brand name in the United States, as well as under the Solvol brand name in Australia; and automatic toilet bowl cleaners under the X-14 brand name. It sells its products primarily through warehouse club stores, hardware stores, automotive parts outlets, industrial distributors and suppliers, mass retail and home center stores, value retailers, grocery stores, online retailers, farm supply, sport retailers, and independent bike dealers. WD-40 Company was founded in 1953 and is headquartered in San Diego, California.