TheRealReal, Inc. (NASDAQ: REAL)

Sector: Consumer Cyclical Industry: Luxury Goods CIK: 0001573221
Market Cap 1.22 Bn
P/B -3.16
P/E -17.03
P/S 1.84
ROIC (Qtr) -32.45
Div Yield % 0.00
Rev 1y % (Qtr) 17.47
Total Debt (Qtr) 468.23 Mn
Debt/Equity (Qtr) -1.22
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About

The RealReal, Inc. (REAL) operates as a leading online marketplace for authenticated, resale luxury goods. The company is revolutionizing the luxury resale industry by providing an end-to-end service that unlocks supply and creates a trusted, curated online marketplace for buyers globally. The company operates primarily in the luxury resale industry, providing a platform for consignors to sell their pre-owned luxury goods and for buyers to purchase these items. The RealReal's main business activities involve providing a platform for consignors...

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Investment thesis

Bull case

  • Healthy cash reserves of 123.28M provide 5.12x coverage of short-term debt 24.08M, demonstrating strong liquidity position and minimal refinancing risk.
  • Retained earnings of (1.26B) represent substantial 3.26x of equity (385.05M), indicating strong internal capital generation.
  • Cash reserves of 123.28M provide solid 1.52x coverage of other non-current liabilities 81.02M, indicating strong liquidity.
  • Cash reserves of 123.28M exceed inventory value of 29.70M by 4.15x, indicating strong liquidity and inventory management.
  • Cash position of 123.28M fully covers payables of 11.12M by 11.09x, showing strong vendor relationship management.

Bear case

  • Operating cash flow of 15.48M barely covers its investment activities of (31.13M), with a coverage ratio of -0.50, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • The company's operating cash flow of 15.48M shows concerning coverage of stock compensation expenses of 28.67M, with a 0.54 ratio indicating potential earnings quality issues.
  • Free cash flow of (17.96M) provides weak coverage of capital expenditures of 33.44M, with a -0.54 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (44.81M) show weak coverage of depreciation charges of 49M, with a -0.91 ratio indicating high capital intensity and potential reinvestment needs.
  • Operating cash flow of 15.48M barely covers operating expenses of 272.90M with a 0.06 ratio, suggesting thin operational efficiency margins and limited flexibility.

Product and Service Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Luxury Goods
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TPR Tapestry, Inc. 29.76 Bn 56.98 3.96 3.94 Bn
2 SIG Signet Jewelers Ltd 4.18 Bn 28.80 0.61 1.15 Bn
3 CPRI Capri Holdings Ltd 2.40 Bn -4.76 0.65 1.31 Bn
4 REAL TheRealReal, Inc. 1.22 Bn -17.03 1.84 0.47 Bn
5 LUXE LuxExperience B.V. 0.92 Bn 1.60 0.38 0.22 Bn
6 MOV Movado Group Inc 0.88 Bn 1,242.00 1.44 0.08 Bn
7 ELA Envela Corp 0.34 Bn 33.05 1.61 0.02 Bn
8 LANV Lanvin Group Holdings Ltd 0.18 Bn -0.84 0.52 -

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 4.32 1.99
EV to Cash from Ops. EV/CFO 102.11 -20.65
EV to Debt EV to Debt 3.38 5.26
EV to EBIT EV/EBIT -35.29 -18.61
EV to EBITDA EV/EBITDA 115.89 3.85
EV to Free Cash Flow [EV/FCF] EV/FCF -88.05 -11.08
EV to Market Cap EV to Market Cap 1.30 2.01
EV to Revenue EV/Rev 2.39 1.66
Price to Book Value [P/B] P/B -3.16 8.26
Price to Earnings [P/E] P/E -17.03 103.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 0.46
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -92.20
Dividend per Basic Share Div per Share (Qtr) 0.00 0.37
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 13.15
Interest Coverage Int. cover (Qtr) -1.70 65.47
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -39.64 19.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -26.66 324.42
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -2.57
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 35.01 113.88
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 155.90 358.60
EBIT Growth (1y) % EBIT 1y % (Qtr) 35.13 105.68
EBT Growth (1y) % EBT 1y % (Qtr) 18.41 83.10
EPS Growth (1y) % EPS 1y % (Qtr) 21.95 121.00
FCF Growth (1y) % FCF 1y % (Qtr) -23.22 -35.68
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 14.41 16.54
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.81 1.29
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.10
Cash Ratio Cash Ratio (Qtr) 0.55 0.83
Current Ratio Curr Ratio (Qtr) 0.81 2.29
Debt to Equity Ratio Debt/Equity (Qtr) -1.22 1.37
Interest Cover Ratio Int Coverage (Qtr) -1.70 65.47
Times Interest Earned Times Interest Earned (Qtr) -1.70 65.47
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 0.60 2.90
EBIT Margin % EBIT Margin % (Qtr) -6.76 -0.51
EBT Margin % EBT Margin % (Qtr) -10.74 -2.94
Gross Margin % Gross Margin % (Qtr) 74.50 48.43
Net Profit Margin % Net Margin % (Qtr) -10.80 -4.98