Williams-Sonoma (WSM) outpaces stock market gains: what you need to know

Williams-Sonoma (WSM) closed the last trading day at $139.50, moving +1.25% from the previous trading session. That move topped the S&P 500’s 0.48% daily gain. Meanwhile, the Dow Jones gained 0.2% and the Nasdaq, a technology-heavy index, added 0.19%.

Going into today, shares of the kitchenware and furniture seller had lost 6.32% over the past month, outpacing the retail sector’s 10.21% loss and wholesale and the 8.48% loss of the S&P 500 during this period.

Investors are hoping for strength from Williams-Sonoma as its next earnings release nears. The company is expected to post EPS of $2.97, up 1.37% from the prior year quarter. Meanwhile, Zacks’ consensus estimate for revenue calls for net sales of $1.83 billion, up 4.46% from the year-ago period.

Zacks consensus estimates for the full year of WSM call for earnings of $15.75 per share and revenue of $8.66 billion. These results would represent year-over-year variations of +6.06% and +5.05%, respectively.

It’s also important to note recent changes to analyst estimates for Williams-Sonoma. Recent revisions tend to reflect the latest short-term trading trends. With this in mind, we can view positive estimate revisions as a sign of optimism about the company’s business prospects.

Our research shows that these estimate changes are directly correlated to short-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes into account these estimation changes and provides a clear and actionable scoring model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive track record of outperformance verified by external audits, with #1 stocks generating an average annual return of +25% since 1988 Over the past 30 days, our consensus EPS projection has increased by 1.25%. Williams-Sonoma currently has a Zacks rank of No. 2 (buy).

As for its valuation, Williams-Sonoma holds a Forward P/E ratio of 8.75. This valuation marks a discount to the average Forward P/E of its sector of 9.97.

It should also be noted that WSM currently has a PEG ratio of 1.53. The PEG ratio is similar to the widely used P/E ratio, but this measure also takes into account the company’s expected earnings growth rate. The Retail – Home Furnishings industry currently had an average PEG ratio of 1.17 as of yesterday’s close.

The Retail – Furniture industry is part of the Retail – Wholesale sector. This industry currently has a Zacks Industry Rank of 75, which places it in the top 30% of over 250 industries.

The Zacks Industry Ranking assesses the strength of our industry groups by measuring the average Zacks Ranking of individual stocks within the groups. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.

Be sure to use Zacks.com to track all of these stock movement metrics, and more, in future trading sessions.

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