Is RH Stock a Strategic Buy Amid Tariff Relief and Global Expansion?

The recent one-year delay in U.S. tariff increases on upholstered furniture, kitchen cabinets, and vanities has sent ripples through the luxury home goods sector, with RH (NYSE: RH) emerging as a standout beneficiary. As the Trump administration extended the 25% tariff rate until January 1, 2027, the move has alleviated immediate cost pressures for retailers reliant on imported goods, including RH, which sources a significant portion of its inventory from China and Vietnam according to Supply Chain Dive. For value-oriented investors, this reprieve-coupled with RH's aggressive international expansion and robust free cash flow-presents a compelling case for evaluating the stock as a long-term turnaround candidate.

Tariff Relief: A Breathing Room for Strategic Planning

The delay in tariff hikes, announced in January 2026, was framed by the administration as a tactical pause to facilitate trade negotiations with the UK, Japan, and the EU according to the New York Post. For RH, this extension mitigates the risk of margin compression that had previously weighed on its financial performance. In the third quarter of 2025, RH's adjusted operating margins had dipped due to anticipation of the 30% tariff increase, a trend analysts now expect to stabilize according to Seeking Alpha. According to a report by Supply Chain Dive, the delay has allowed companies like RH to recalibrate sourcing strategies and absorb costs incrementally, rather than facing a sudden 5%–25% price surge as reported by Supply Chain Dive.

Moreover, the reprieve has injected confidence into the market. RH's shares surged 9.5% following the announcement, reflecting investor optimism about reduced trade uncertainty according to Yahoo Finance. This momentum is critical for a company that has faced headwinds from a sluggish housing market and shifting consumer preferences toward minimalist, high-quality furnishings as noted by Nasdaq.

Global Expansion: A High-Stakes Bet on Luxury Demand

While tariff relief provides short-term stability, RH's long-term value proposition hinges on its ability to scale internationally. The company has outlined an ambitious 2026 expansion plan, including new galleries in London, Milan, and San Francisco, alongside the launch of its RH Antiques division according to Webull. These moves aim to capitalize on the growing appetite for curated, luxury home goods in Europe and beyond, a strategy that mirrors the success of its Paris location.

Analysts remain cautiously optimistic. A Webull report notes that RH's international revenue grew by 8.4% in Q2 2026, driven by strong performance in its existing European markets according to Nasdaq. However, the expansion comes with risks. Opening new galleries in high-cost cities like London and Milan requires significant capital outlays, and the company's long-term revenue growth forecast for 2025 stands at 10%, slightly below its historical averages as reported by Yahoo Finance. That said, RH's free cash flow-$83 million in Q3 2025 and projected to reach $250–$300 million for the full year according to Nasdaq-provides a financial buffer to fund these initiatives without overleveraging.

Analyst Projections: A Mixed but Manageable Outlook

The investment community's view of RH remains divided. As of late 2025, 31 Wall Street analysts assigned a median price target of $185.00, implying a 4.3% downside from the stock's current price of $193.41 according to Tickernerd. While seven analysts advocate a "Buy" and 10 a "Hold," three have issued "Sell" ratings, citing concerns over margin pressures and the high cost of international expansion as reported by Tickernerd.

Yet, long-term fundamentals remain intact. SimplyWall St projects RH to grow earnings at 33.1% annually and revenue at 7.8% through 2027, supported by its premium brand positioning and expanding product lines according to SimplyWall St. The company's return on equity is forecast to hit 45.5% in three years, a metric that underscores its ability to generate shareholder value despite macroeconomic headwinds according to SimplyWall St.

Strategic Buy? Weighing the Risks and Rewards

For value-oriented investors, RH's current valuation offers a nuanced opportunity. The stock trades at a price-to-earnings ratio of 22.5x, below its five-year average of 28x, suggesting potential undervaluation relative to its growth trajectory according to Nasdaq. Meanwhile, the tariff delay and strong free cash flow provide a buffer against short-term volatility, while international expansion targets high-growth markets with limited domestic competition.

However, risks persist. A failure to execute on its global strategy-whether due to operational missteps or a slowdown in luxury spending-could erode investor confidence. Additionally, if trade negotiations stall and tariffs rise in 2027, RH's margins could face renewed pressure.

Conclusion

RH's stock represents a strategic buy for investors willing to balance near-term uncertainties with long-term growth potential. The one-year tariff delay has bought the company critical time to stabilize its cost structure, while its international expansion and free cash flow generation position it to capitalize on the global luxury market. While analyst skepticism is warranted, the alignment of favorable macroeconomic conditions and RH's operational resilience makes it a compelling candidate for a diversified portfolio.