Contrasting Rent the Runway (NASDAQ:RENT) & RH (NYSE:RH)

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

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%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RH	$3.44 billion	0.70	$124.79 million	$5.62	22.53
Rent the Runway	$329.80 million	0.24	$22.60 million	$12.66	0.18

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.

Institutional and Insider Ownership

90.2% of RH shares are owned by institutional investors. Comparatively, 73.1% of Rent the Runway shares are owned by institutional investors. 26.9% of RH shares are owned by company insiders. Comparatively, 0.4% of Rent the Runway shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets 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 presently has a consensus price target of $163.00, suggesting a potential upside of 28.73%. Given RH’s stronger consensus rating and higher probable upside, research analysts clearly believe RH is more favorable than Rent the Runway.

Volatility and Risk

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

Summary

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

About RH

RH, formerly known as Restoration Hardware, is a luxury home-furnishings company. It offers furniture, lighting, textiles, rugs, bath and outdoor products, décor, and related design services for residential and commercial spaces. The company sells through its website, catalogs and design-focused retail galleries, which may include restaurants and other hospitality features. RH serves customers primarily in the United States and Canada and has also established a presence in the United Kingdom. Founded in 1979 in Eureka, California, the company adopted the RH name in 2012.

About Rent the Runway

Rent the Runway, Inc. is a fashion technology company that operates an online platform for renting designer apparel and accessories. The company enables customers to access clothing for special occasions, everyday wear and seasonal needs without purchasing each item outright. Its offerings include subscription-based rental plans and one-time rentals of dresses, clothing, handbags, accessories and other fashion products from a range of designer brands. Rent the Runway also supports the resale of select pre-owned items through its platform, extending the lifecycle of products in its assortment.