| Snowflake Score | |
|---|---|
| Valuation | 4/6 |
| Future Growth | 1/6 |
| Past Performance | 5/6 |
| Financial Health | 6/6 |
| Dividends | 5/6 |
WSM Stock Overview
Williams-Sonoma, Inc. operates as an omni-channel specialty retailer of various products for home.
Williams-Sonoma Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$158.83 |
| 52 Week High | US$223.32 |
| 52 Week Low | US$101.58 |
| Beta | 1.61 |
| 1 Month Change | 21.98% |
| 3 Month Change | 25.95% |
| 1 Year Change | -0.30% |
| 3 Year Change | 150.92% |
| 5 Year Change | 264.54% |
| Change since IPO | 7,557.88% |
Recent News & Updates
Is There Now An Opportunity In Williams-Sonoma, Inc. (NYSE:WSM)?
Williams-Sonoma, Inc. ( NYSE:WSM ), might not be a large cap stock, but it saw a significant share price rise of over...
Why Williams-Sonoma Has It All For Dividend Investors
WSM is a premium retailer that is well positioned to continue growing its well-respected brands. While inflation is a challenge for consumer spending, I believe WSM can weather these challenges. Management is actively returning capital to shareholders through share buybacks and dividend growth. I like high yielding investments as much as anyone else, but I also acknowledge the fact that total returns also matter. For those who currently have enough income or simply want to diversify their income stream between value and growth, there are plenty of the latter that remain rather inexpensive, especially considering their forward growth prospects. This brings me to Williams-Sonoma (WSM), which remains attractive and sits well below its 52-week high of $223. In this article, I highlight why WSM remains a good option for dividend growth investors in this crazy market, so let's get started. Why WSM? Williams-Sonoma is a leader in the U.S. domestic home segment, with a strong retail platform that gives it direct access to consumers. Its brands and stores include its namesake Williams-Sonoma, which offers high-end cooking products, Pottery Barn / Pottery Barn Kids, and West Elm, which is an emerging concept for young professional. WSM also caters to developers of commercial and residential projects. WSM's stores are generally located in high end shopping malls and retail centers such as those owned by the leading shopping center REIT Federal Realty Trust (FRT). It's built a defensible position in the home furnishings industry, giving it brand equity that resonates with consumers. This has enabled WSM to price its products at a premium and this is reflected by is strong margins. As shown below, WSM scores an A+ profitability rating with sector leading EBTIDA and Net Income margins of 20% and 14%, respectively. WSM Profitability (Seeking Alpha) Moreover, WSM generates a very high 83% return on equity, due primarily to its active share repurchases. As shown below, WSM retired an impressive 15% of its outstanding share count over the past 5 years alone. WSM Shares Outstanding (Seeking Alpha) Meanwhile, WSM continues to demonstrate strong growth, with revenue rising by 9.5% YoY in the first fiscal quarter (ended in May). This is on top of very strong growth last year, when many consumers were flush with cash and investing in stay at home living. This is reflected by the 50% revenue growth that WSM has seen on a 2-year stacked basis. Moreover, unlike lower end retailers that have had to absorb cost inflation, WSM expanded its margins, with operating margins growing by 140 bps YoY to 17.1%. Plus, WSM continued robust capital returns to shareholders, with $500 million in share repurchases during the fiscal first quarter alone. Looking forward, management reiterated its commitment to becoming a $10 billion dollar run-rate company by the end of next year. This includes promising growth on WSM's B2B side, which saw 53% YoY growth in the recent quarter, and recent installs at Marriot's (MAR) new headquarter hotel. While risks to the thesis include new entrants into the space such as the online retailer, Wayfair (W), WSM maintains the first mover advantage in many ways, including customer analytics, as noted by Morningstar in its recent analyst report: Williams-Sonoma is in a strong position to outperform its competitors and grow market share--a key tenet of our thesis is the company's continued access to some of the best analytics in retail. First, Williams-Sonoma has a nearly 20-year lead on most retailers, collecting insights on end users for more than 25 years, at a granular level (collecting more than 100 data points on each transaction, initially via the catalog channel). Williams-Sonoma has collected e-commerce data from more than 880 million shopping sessions annually, more than 700 different engagement metrics between the home page and checkout, and more than 200 billion aggregate data points from site engagement, which are all parsed by more than 100 in-house marketing and data science employees. This deep knowledge, in our opinion, is ultimately what results in the business operating more efficiently and turning inventory faster than most of its peers. The robust capture of customer purchasing patterns allows the firm to market tactically, since vast amounts of transactions can become predictive in nature. Williams-Sonoma can begin to work out what the consumer's next likely purchase might be and produce information to facilitate that next sale more quickly, leading to lower repeat customer acquisition costs.
Williams-Sonoma Fits Dividend Growth Investors With A Long Horizon
Williams-Sonoma dealt with the highly challenging pandemic and maintained its dividend despite the lockdowns. Increasing housing prices incentivizes developers to build more houses, expanding the demand for Williams-Sonoma products. The current valuation of Williams-Sonoma is attractive and has a good margin of safety. Introduction As a dividend growth investor, I am constantly looking for additional dividend growth opportunities that will increase my income. On some occasions, I add to my existing positions; on others, I start new positions to increase my diversification and exposure to different segments. The volatile market may be an opportunity for investors seeking cheaper income-producing assets. One of the segments that declined the most was the consumer discretionary sector. Shares in the industry tend to be more cyclical, and investors are afraid of a recession, so they sell the stocks. Long-term investors can then benefit from that short-term weakness. I will analyze Williams-Sonoma, Inc. (WSM), a prominent consumer discretionary name, in this article. I will analyze the company using my methodology for analyzing dividend growth stocks. I am using the same method to make it easier to compare researched companies. I will examine the company's fundamentals, valuation, growth opportunities, and risks. I will then try to determine if it's a good investment. According to Seeking Alpha's company overview, Williams-Sonoma operates as an omnichannel specialty retailer of various products for the home. It offers cooking, dining, and entertaining products, such as cookware, tools, electrics, cutlery, tabletop and bar, outdoor furniture, and a library of cookbooks under the Williams Sonoma Home brand, as well as home furnishings and decorative accessories under the Williams Sonoma lifestyle brand. Fundamentals Sales of Williams-Sonoma have more than doubled over the last decade. The most noticeable increase in sales was during the pandemic, when consumers had spare time and couldn't spend money as the economy was on lockdown. The growth is mainly organic, as the company opens stores and increases same-store sales. In the future, analysts' consensus, as seen on Seeking Alpha, expects Williams-Sonoma to keep growing sales at an annual rate of ~3% in the medium term. Data by YCharts The EPS (earnings per share) has increased faster than the sales. EPS has increased by 570% in a decade, with a significant increase during the pandemic. EPS increase is the combination of sales increase, buybacks, and an 80% increase in the operating margins. In the future, analysts' consensus, as seen on Seeking Alpha, expects Williams-Sonoma to keep growing EPS at an annual rate of ~4% in the medium term. Data by YCharts The company's most prominent way to return capital to shareholders is through dividends. The company has been increasing its payout annually for 12 years. The dividend yield is relatively safe, with the payout ratio below 20%; which means the company should be able to maintain it even if there is a recession. The entry yield is 2.1% due to that low payout ratio. Data by YCharts In addition to dividends, the company also returns capital to shareholders via shares repurchases plans. These buyback plans contribute to the bottom line of growing companies. Over the last decade, the company has repurchased more than 30% of its outstanding shares. Additional buybacks at the current valuation will have a meaningful effect on the EPS. Data by YCharts Valuation The company's P/E (price to earnings) ratio, considering the forecasted earnings for 2022, is 8. It is the lowest point we have seen over the last twelve months. Even if it grows slowly, paying eight times the earnings of a growing company seems attractive to me. It is usually hard to find quality stocks trading for a single digits P/E ratio. Data by YCharts The graph below from FAST Graphs™ emphasizes how attractively valued the company is. You can see that during the last two decades, the shares of Williams-Sonoma traded almost in line with the average P/E of 18. However, several months ago, the share price plunged and is continuing to do so. While the company doesn't grow as fast as it did in the last twenty years, it is still not justifying such a deep discount, in my opinion. Fastgraphs To conclude, Williams-Sonoma is a solid consumer discretionary company. Unlike other companies, it is not as cyclical, allowing it to increase sales and EPS continuously. This leads to higher dividends and buybacks as the company prioritizes returning capital to shareholders. This package comes at what I believe to be an attractive valuation. Opportunities The debt levels are very low at the moment. The net debt to EBITDA is below 1, giving the company plenty of flexibility for its balance sheet. The low debt level has two advantages. It means that as the interest rates climb, the company's interest payments won't grow too much. It also means that as share prices of other companies decline due to the volatility, Williams-Sonoma will be able to grow by acquisition. Moreover, there is an increase in the price of houses in the United States. Therefore, we see construction companies trying to close the gaps and build more houses to capitalize on the price increase. These new houses will need home furnishing, and that's where Williams-Sonoma will capitalize on that trend. The growing need for homes will support the company in the medium term. The company is also expanding globally and in terms of sales channels. Williams-Sonoma is already present in Canada, Europe, the Middle East, and more. This broad reach makes it less dependent on the American market, making the sales less volatile. In addition, its investment in the digital world is crucial as it becomes more efficient as digital sales are cheaper in terms of labor cost and the need for stores. Risks Inflation affects retailers harsher than it affects other businesses. Retail is a business with high labor costs, and retailers usually have low margins as they connect producers and end clients. The price increases of the goods sold and the higher wages will pressure the company's margins. Williams-Sonoma has a high 18% operating margin, so it may be able to absorb some of the blow, but it will still affect profitability.
Shareholder Returns
| WSM | US Specialty Retail | US Market | |
|---|---|---|---|
| 7D | 8.1% | 5.2% | 1.3% |
| 1Y | -0.3% | -30.3% | -11.7% |
Return vs Industry: WSM exceeded the US Specialty Retail industry which returned -30.3% over the past year.
Return vs Market: WSM exceeded the US Market which returned -11.7% over the past year.
Price Volatility
| WSM volatility | |
|---|---|
| WSM Average Weekly Movement | 8.8% |
| Specialty Retail Industry Average Movement | 8.9% |
| Market Average Movement | 7.8% |
| 10% most volatile stocks in US Market | 16.9% |
| 10% least volatile stocks in US Market | 3.2% |
Stable Share Price: WSM is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 9% a week.
Volatility Over Time: WSM's weekly volatility (9%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1956 | 16,600 | Laura Alber | https://www.williams-sonomainc.com |
Williams-Sonoma, Inc. operates as an omni-channel specialty retailer of various products for home. It offers cooking, dining, and entertaining products, such as cookware, tools, electrics, cutlery, tabletop and bar, outdoor, furniture, and a library of cookbooks under the Williams Sonoma Home brand, as well as home furnishings and decorative accessories under the Williams Sonoma lifestyle brand; and furniture, bedding, lighting, rugs, table essentials, and decorative accessories under the Pottery Barn brand. The company also provides home decor products under the West Elm brand; kids accessories under the Pottery Barn Kids brand; and an organic bedding to multi-purpose furniture under the Pottery Barn Teen brand.
Williams-Sonoma Fundamentals Summary
| WSM fundamental statistics | |
|---|---|
| Market Cap | US$10.92b |
| Earnings (TTM) | US$1.15b |
| Revenue (TTM) | US$8.39b |
9.5x
P/E Ratio1.3x
P/S RatioIs WSM overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| WSM income statement (TTM) | |
|---|---|
| Revenue | US$8.39b |
| Cost of Revenue | US$4.68b |
| Gross Profit | US$3.71b |
| Other Expenses | US$2.56b |
| Earnings | US$1.15b |
Last Reported Earnings
May 01, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | 16.76 |
| Gross Margin | 44.20% |
| Net Profit Margin | 13.74% |
| Debt/Equity Ratio | 0% |
How did WSM perform over the long term?
See historical performance and comparisonDividends
2.0%
Current Dividend Yield18%
Payout RatioValuation
Is WSM undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
4/6Valuation Score 4/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast
Key Valuation Metric
Which metric is best to use when looking at relative valuation for WSM?
Other financial metrics that can be useful for relative valuation.
| What is WSM's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$10.92b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 1.4x |
| Enterprise Value/EBITDA | 7x |
| PEG Ratio | 5.8x |
Price to Earnings Ratio vs Peers
How does WSM's PE Ratio compare to its peers?
| WSM PE Ratio vs Peers |
|---|
| Company | PE | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 10.3x | ||
RH RH | 8.4x | -2.1% | US$7.6b |
SNBR Sleep Number | 10.5x | 6.1% | US$1.1b |
ARHS Arhaus | 16.7x | 20.5% | US$1.1b |
HVT Haverty Furniture Companies | 5.5x | -16.6% | US$496.6m |
WSM Williams-Sonoma | 9.5x | 1.6% | US$10.9b |
Price-To-Earnings vs Peers: WSM is good value based on its Price-To-Earnings Ratio (9.5x) compared to the peer average (10.3x).
Price to Earnings Ratio vs Industry
How does WSM's PE Ratio compare vs other companies in the US Specialty Retail Industry?
Price-To-Earnings vs Industry: WSM is expensive based on its Price-To-Earnings Ratio (9.5x) compared to the US Specialty Retail industry average (6.7x)
Price to Earnings Ratio vs Fair Ratio
What is WSM's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
| Fair Ratio | |
|---|---|
| Current PE Ratio | 9.5x |
| Fair PE Ratio | 13.9x |
Price-To-Earnings vs Fair Ratio: WSM is good value based on its Price-To-Earnings Ratio (9.5x) compared to the estimated Fair Price-To-Earnings Ratio (13.9x).
Share Price vs Fair Value
What is the Fair Price of WSM when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: WSM ($158.83) is trading below our estimate of fair value ($377.49)
Significantly Below Fair Value: WSM is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is lower than the current share price.
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Future Growth
How is Williams-Sonoma forecast to perform in the next 1 to 3 years based on estimates from 20 analysts?
Future Growth Score
1/6Future Growth Score 1/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE
1.6%
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: WSM's forecast earnings growth (1.6% per year) is below the savings rate (1.9%).
Earnings vs Market: WSM's earnings (1.6% per year) are forecast to grow slower than the US market (14.4% per year).
High Growth Earnings: WSM's earnings are forecast to grow, but not significantly.
Revenue vs Market: WSM's revenue (4% per year) is forecast to grow slower than the US market (7.9% per year).
High Growth Revenue: WSM's revenue (4% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: WSM's Return on Equity is forecast to be very high in 3 years time (41.8%).
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Past Performance
How has Williams-Sonoma performed over the past 5 years?
Past Performance Score
5/6Past Performance Score 5/6
Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE
33.8%
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: WSM has high quality earnings.
Growing Profit Margin: WSM's current net profit margins (13.7%) are higher than last year (11.9%).
Past Earnings Growth Analysis
Earnings Trend: WSM's earnings have grown significantly by 33.8% per year over the past 5 years.
Accelerating Growth: WSM's earnings growth over the past year (32.3%) is below its 5-year average (33.8% per year).
Earnings vs Industry: WSM earnings growth over the past year (32.3%) exceeded the Specialty Retail industry 30.2%.
Return on Equity
High ROE: WSM's Return on Equity (88%) is considered outstanding.
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Financial Health
How is Williams-Sonoma's financial position?
Financial Health Score
6/6Financial Health Score 6/6
Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage
Financial Position Analysis
Short Term Liabilities: WSM's short term assets ($1.9B) exceed its short term liabilities ($1.7B).
Long Term Liabilities: WSM's short term assets ($1.9B) exceed its long term liabilities ($1.2B).
Debt to Equity History and Analysis
Debt Level: WSM is debt free.
Reducing Debt: WSM has no debt compared to 5 years ago when its debt to equity ratio was 3.8%.
Debt Coverage: WSM has no debt, therefore it does not need to be covered by operating cash flow.
Interest Coverage: WSM has no debt, therefore coverage of interest payments is not a concern.
Balance Sheet
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Dividend
What is Williams-Sonoma current dividend yield, its reliability and sustainability?
Dividend Score
5/6Dividend Score 5/6
Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage
1.96%
Current Dividend Yield
Dividend Yield vs Market
Notable Dividend: WSM's dividend (1.96%) is higher than the bottom 25% of dividend payers in the US market (1.49%).
High Dividend: WSM's dividend (1.96%) is low compared to the top 25% of dividend payers in the US market (4%).
Stability and Growth of Payments
Stable Dividend: WSM's dividends per share have been stable in the past 10 years.
Growing Dividend: WSM's dividend payments have increased over the past 10 years.
Earnings Payout to Shareholders
Earnings Coverage: With its low payout ratio (17.7%), WSM's dividend payments are well covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: With its low cash payout ratio (20.2%), WSM's dividend payments are well covered by cash flows.
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Management
How experienced are the management team and are they aligned to shareholders interests?
10.1yrs
Average management tenure
CEO
Laura Alber (53 yo)
16.08yrs
Tenure
US$21,324,327
Compensation
Ms. Laura J. Alber serves as Director at salesforce.com, inc. since November 30, 2021. She has been the Chief Executive Officer at Williams-sonoma Inc. since May 26, 2010 and has been its President since J...
CEO Compensation Analysis
Compensation vs Market: Laura's total compensation ($USD21.32M) is above average for companies of similar size in the US market ($USD12.88M).
Compensation vs Earnings: Laura's compensation has been consistent with company performance over the past year.
Leadership Team
Experienced Management: WSM's management team is seasoned and experienced (10.1 years average tenure).
Board Members
Experienced Board: WSM's board of directors are not considered experienced ( 2.4 years average tenure), which suggests a new board.
Ownership
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: WSM insiders have only sold shares in the past 3 months.
Recent Insider Transactions
Ownership Breakdown
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Top Shareholders
Company Information
Williams-Sonoma, Inc.'s employee growth, exchange listings and data sources
Key Information
- Name: Williams-Sonoma, Inc.
- Ticker: WSM
- Exchange: NYSE
- Founded: 1956
- Industry: Homefurnishing Retail
- Sector: Retail
- Implied Market Cap: US$10.922b
- Shares outstanding: 68.76m
- Website: https://www.williams-sonomainc.com
Number of Employees
Location
- Williams-Sonoma, Inc.
- 3250 Van Ness Avenue
- San Francisco
- California
- 94109
- United States
Listings
Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/08/12 00:00 |
| End of Day Share Price | 2022/08/12 00:00 |
| Earnings | 2022/05/01 |
| Annual Earnings | 2022/01/30 |
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.