Luxury furniture retailer RH (RH -1.99%) reports its third-quarter results this week. Ahead of the report after market close on Thursday, many investors are likely wondering whether or not they should buy shares of the company, which has been expanding into the hospitality business recently and is planning to take its furniture overseas next year. After all, with shares down about 50% year to date, they look cheap.

Unfortunately, there's no way to know how the stock will trade following the earnings report. But what investors can do is assess some of the potential risks of owning the stock and consider whether or not shares appear attractive today as a long-term investment.

Attractively valued for long-term investors

With RH trading at just 9 times earnings at the time of this writing, investors are clearly pricing in some tough times ahead. And tough times are likely coming. In the company's fiscal second-quarter letter to shareholders, management expressed a bleak view for the coming quarters.

[O]ur expectation is for continued softening in our business trends during the remainder of fiscal 2022 as a result of ongoing weakness in the housing market over the next several quarters and possibly longer due to the Federal Reserve's anticipated interest rate increases and the cycling of record COVID-driven sales levels in 2021.

But for investors with a long-term outlook, it would make sense to expect an eventual recovery in the luxury home market and in RH's business. RH certainly seems to expect one. Management noted that it believes that its investments in its business will pay off over time, helping the company "continue driving long term industry-leading performance." Further, RH is putting its money where its mouth is. The company repurchased 1 million shares of its stock during its fiscal second quarter.

Considering the company's long-term opportunity, shares do appear attractively valued. But only patient investors should get in on this stock.

Expect significant volatility

Perhaps the only thing RH investors can expect with near certainty is unpredictability in how the share price will trade in the near term. To this end, RH shares will likely be volatile. The combination of an attractively valued company with a healthy balance sheet and a potentially dramatic slowdown in sales in the near term makes Wall Street's attitude toward the stock, after earnings and over the next few quarters, extremely difficult to predict.

RH CEO Gary Friedman warned investors about potentially dismal near-term results in the luxury home space in the company's fiscal second-quarter earnings call. When a market benefits from sudden and substantial growth the way the luxury home market did in 2020 and 2021, Friedman explained, "it doesn't grow from there, and it doesn't stabilize from there. It goes down."

But to revisit the point about valuation in the first section, even RH seems to think shares have largely priced in a period of sales declines; otherwise, the company wouldn't be spending substantial sums to repurchase its shares. Further, Friedman may have sounded bearish about the near term but he was as bullish as ever on the company's long-term potential. "Our plan to expand the RH ecosystem globally multiplies the market opportunity to $7 to $10 trillion, one of the largest and most valuable addressed by any brand in the world today," he said in the company's second-quarter letter to shareholders. "A one percent share of the global market represents a $70 to $100 billion opportunity."

So should investors buy RH stock today? That depends on their time horizon. Over the short term, there's a lot of uncertainty and the ride will likely be bumpy. But this may be a good time for patient investors to buy into this company (although they may want to save some cash to buy at a potentially lower price, too).