Rent the Runway (NASDAQ:RENT – Get Free Report) and RH (NYSE:RH – Get Free Report) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.
Risk and Volatility
Rent the Runway has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500. Comparatively, RH has a beta of 1.92, indicating that its share price is 92% more volatile than the S&P 500.
Analyst Ratings
This is a breakdown of current recommendations for Rent the Runway and RH, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Rent the Runway | 1 | 0 | 0 | 0 | 1.00 |
| RH | 3 | 9 | 7 | 0 | 2.21 |
RH has a consensus target price of $163.00, indicating a potential upside of 21.01%. Given RH’s stronger consensus rating and higher probable upside, analysts clearly believe RH is more favorable than Rent the Runway.
Insider and Institutional Ownership
73.1% of Rent the Runway shares are owned by institutional investors. Comparatively, 90.2% of RH shares are owned by institutional investors. 0.4% of Rent the Runway shares are owned by insiders. Comparatively, 26.9% of RH shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Valuation & Earnings
This table compares Rent the Runway and RH”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Rent the Runway | $329.80 million | 0.23 | $22.60 million | $12.66 | 0.17 |
| RH | $3.44 billion | 0.74 | $124.79 million | $5.62 | 23.97 |
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.
Profitability
This table compares Rent the Runway and RH’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Rent the Runway | 11.80% | N/A | -21.89% |
| RH | 3.23% | 132.79% | 1.63% |
Summary
RH beats Rent the Runway on 12 of the 14 factors compared between the two stocks.
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.
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.
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