Contrasting Pier 1 Imports (PIR) & Restoration Hardware Holdings (RH)

Restoration Hardware Holdings (NYSE: RH) and Pier 1 Imports (NYSE:PIR) are both small-cap retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, dividends, profitabiliy, earnings, analyst recommendations, valuation and institutional ownership.

Valuation and Earnings

This table compares Restoration Hardware Holdings and Pier 1 Imports’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Restoration Hardware Holdings $2.24 billion 0.78 $170.90 million $0.35 149.86
Pier 1 Imports $1.83 billion 0.24 $128.30 million $0.38 14.55

Restoration Hardware Holdings has higher revenue and earnings than Pier 1 Imports. Pier 1 Imports is trading at a lower price-to-earnings ratio than Restoration Hardware Holdings, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

87.1% of Pier 1 Imports shares are owned by institutional investors. 18.8% of Restoration Hardware Holdings shares are owned by insiders. Comparatively, 5.5% of Pier 1 Imports shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Restoration Hardware Holdings and Pier 1 Imports’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Restoration Hardware Holdings 0.66% 6.42% 2.55%
Pier 1 Imports 1.65% 12.99% 4.19%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Restoration Hardware Holdings and Pier 1 Imports, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Restoration Hardware Holdings 0 12 6 0 2.33
Pier 1 Imports 5 10 2 0 1.82

Restoration Hardware Holdings presently has a consensus price target of $47.81, suggesting a potential downside of 8.84%. Pier 1 Imports has a consensus price target of $6.93, suggesting a potential upside of 25.35%. Given Pier 1 Imports’ higher possible upside, analysts plainly believe Pier 1 Imports is more favorable than Restoration Hardware Holdings.

Volatility & Risk

Restoration Hardware Holdings has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500. Comparatively, Pier 1 Imports has a beta of 1.71, meaning that its share price is 71% more volatile than the S&P 500.

Dividends

Pier 1 Imports pays an annual dividend of $0.28 per share and has a dividend yield of 5.1%. Restoration Hardware Holdings does not pay a dividend. Pier 1 Imports pays out 73.7% of its earnings in the form of a dividend. Restoration Hardware Holdings has raised its dividend for 4 consecutive years.

Summary

Restoration Hardware Holdings beats Pier 1 Imports on 9 of the 17 factors compared between the two stocks.

Restoration Hardware Holdings Company Profile

RH, formerly Restoration Hardware Holdings, Inc., is a retailer in the home furnishings marketplace. As of January 28, 2017, the Company had two segments: RH Segment and Waterworks. It offers merchandise assortments across a range of categories, including furniture, lighting, textiles, bathware, decor, outdoor and garden, tableware, and child and teen furnishings. The Company classifies its sales into furniture and non-furniture product lines. The Furniture category includes both indoor and outdoor furniture. The Non-furniture category includes lighting, textiles, fittings, fixtures, surfaces, accessories and home decor. The Company’s business is integrated across its channels of distribution consisting of its stores, Source Books and Websites. The Company also owns a controlling interest in Design Investors WW Acquisition Company, LLC, which owns the business operating under the name ‘Waterworks’.

Pier 1 Imports Company Profile

Pier 1 Imports, Inc. is an importer of home decor and furniture. The Company’s operations consist of retail stores and an e-commerce Website conducting business under the name Pier 1 Imports, which sells a range of decorative accessories, furniture, candles, housewares, gifts and seasonal products. The Company’s categories of merchandise include decorative accessories and furniture. The decorative accessories category includes decorative accents and textiles, such as rugs, wall decorations and mirrors, candles, fragrance, gifts and seasonal items. The furniture category includes furniture and furniture cushions to be used in living, dining, office, sunrooms and patios. This merchandise group is generally made of metal or handcrafted natural materials, including rattan, pine, acacia, oak and other woods with either natural, stained, painted or upholstered finishes.

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