Williams-Sonoma (WSM) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3-min read

Williams-Sonoma (WSM) closed at $132.56 in the latest trading session, marking a +0.18% move from the prior day. This change lagged the S&P 500's 0.36% gain on the day. Elsewhere, the Dow lost 0.12%, while the tech-heavy Nasdaq added 0.69%.

Prior to today's trading, shares of the seller of cookware and home furnishings had gained 22.88% over the past month. This has outpaced the Retail-Wholesale sector's gain of 2.36% and the S&P 500's gain of 4.27% in that time.

Investors will be hoping for strength from WSM as it approaches its next earnings release. On that day, WSM is projected to report earnings of $3.21 per share, which would represent year-over-year growth of 50.7%. Meanwhile, our latest consensus estimate is calling for revenue of $2.08 billion, up 12.7% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.45 per share and revenue of $6.55 billion, which would represent changes of +74.59% and +11.14%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for WSM. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 3.18% higher. WSM is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, WSM is currently trading at a Forward P/E ratio of 15.67. Its industry sports an average Forward P/E of 15.9, so we one might conclude that WSM is trading at a discount comparatively.

We can also see that WSM currently has a PEG ratio of 1.88. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Retail - Home Furnishings was holding an average PEG ratio of 1.05 at yesterday's closing price.

The Retail - Home Furnishings industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 76, putting it in the top 30% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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