RH (NYSE:RH) versus WK Kellogg (NYSE:KLG) Critical Analysis

RH (NYSE:RH) and WK Kellogg (NYSE:KLG) are both consumer staples companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Analyst Recommendations

This is a breakdown of current ratings for RH and WK Kellogg, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RH	4	6	10	0	2.30
WK Kellogg	2	8	0	0	1.80

RH presently has a consensus target price of $259.29, indicating a potential upside of 27.16%. WK Kellogg has a consensus target price of $20.88, indicating a potential downside of 9.24%. Given RH’s stronger consensus rating and higher probable upside, equities analysts clearly believe RH is more favorable than WK Kellogg.

Risk and Volatility

RH has a beta of 2.23, meaning that its share price is 123% more volatile than the S&P 500. Comparatively, WK Kellogg has a beta of 0.24, meaning that its share price is 76% less volatile than the S&P 500.

Insider & Institutional Ownership

90.2% of RH shares are held by institutional investors. Comparatively, 95.7% of WK Kellogg shares are held by institutional investors. 27.0% of RH shares are held by insiders. Comparatively, 2.2% of WK Kellogg 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.

Valuation and Earnings

This table compares RH and WK Kellogg”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RH	$3.18 billion	1.20	$72.41 million	$5.37	37.97
WK Kellogg	$2.61 billion	0.76	$81.00 million	$0.37	62.16

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

Profitability

This table compares RH and WK Kellogg’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RH	3.20%	-113.58%	3.08%
WK Kellogg	1.31%	31.34%	5.18%

Summary

RH beats WK Kellogg on 9 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 WK Kellogg

WK Kellogg Co operates as a food company in the United States, Canada, and the Caribbean. It manufactures, markets, and distributes ready-to-eat cereal products primarily under the Frosted Flakes, Special K, Froot Loops, Raisin Bran, Frosted Mini-Wheats, and Kashi brands. The company was formerly known as North America Cereal Co. and changed its name to WK Kellogg Co in March 2023. The company was incorporated in 2022 and is headquartered in Battle Creek, Michigan.