Earnings Beat: Williams-Sonoma, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Williams-Sonoma, Inc. (NYSE:WSM) shareholders are probably feeling a little disappointed, since its shares fell 3.9% to US$135 in the week after its latest quarterly results. The result was positive overall - although revenues of US$1.8b were in line with what the analysts predicted, Williams-Sonoma surprised by delivering a statutory profit of US$1.74 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Williams-Sonoma after the latest results.

Check out our latest analysis for Williams-Sonoma

Following last week's earnings report, Williams-Sonoma's 22 analysts are forecasting 2025 revenues to be US$7.56b, approximately in line with the last 12 months. Statutory earnings per share are forecast to shrink 4.3% to US$8.21 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$7.74b and earnings per share (EPS) of US$8.21 in 2025. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The consensus has reconfirmed its price target of US$141, showing that the analysts don't expect weaker revenue expectations next year to have a material impact on Williams-Sonoma's market value. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Williams-Sonoma analyst has a price target of US$165 per share, while the most pessimistic values it at US$116. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Williams-Sonoma's past performance and to peers in the same industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.6% by the end of 2025. This indicates a significant reduction from annual growth of 7.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Williams-Sonoma is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Still, earnings per share are more important to value creation for shareholders. The consensus price target held steady at US$141, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Williams-Sonoma going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Williams-Sonoma that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.