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Williams-Sonoma (WSM) Q4 Earnings: What's in the Cards?

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Williams-Sonoma, Inc. (WSM - Free Report) is set to report fourth-quarter fiscal 2016 results on Mar 15, after market close.
 
Last quarter, the company posted a positive surprise of 2.6%. The company has surpassed estimates in two of the past four quarters, resulting in an average positive surprise of 1.5%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Williams-Sonoma enjoys a competitive advantage owing to its multi-brand/multi-channel business model. This leading specialty retailer of home furnishing products reported better-than-expected earnings in two of the last three quarters of 2016. Moreover, its e-commerce business is gaining traction. The successful launch of new products and stores is also contributing to its revenues. These tailwinds are expected to drive earnings and revenues in the to-be reported quarter as well.

However, sluggish comparable brand revenues for several quarters owing to soft retail environment and cautious customers raise concerns. The rate of comparable brand revenue increase has softened across all brands over the years. Comparable brand revenues are expected to increase in the range of negative 1% to 4%. This does not indicate any significant improvement from the current trend.

Notably, for the fiscal fourth quarter, the Zacks Consensus Estimate is pegged at $1.52, down 2.03% year over year. Meanwhile, the estimate for revenues is $1.61 billion, implying a 1.5% increase.

Earnings Whispers

Our proven model does not conclusively show that Williams-Sonoma will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP is -3.95% as the Most Accurate estimate is $1.46 while the Zacks Consensus Estimate is pegged higher at $1.52. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Williams-Sonoma, Inc. Price and EPS Surprise

 

Zacks Rank: Though Williams-Sonoma’s Zacks Rank #3 increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Peer Release

RH (RH - Free Report) (formerly Restoration Hardware) reported preliminary fourth quarter adjusted earnings per share of 68 cents. The preliminary adjusted earnings figure beat the Zacks Consensus Estimate of 65 cents by 4.6%.

Upcoming Releases

At Home Group Inc. is expected to report its quarterly numbers on Mar 14.

Pier 1 Imports, Inc. is likely to report its quarterly numbers on Apr 12.

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