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Williams-Sonoma (WSM) Up 10.4% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Williams-Sonoma, Inc. (WSM - Free Report) . Shares have added about 10.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Fourth-Quarter Fiscal 2016 Results
Williams-Sonoma’s fourth-quarter fiscal 2016 adjusted earnings (after adjusting for pre-tax gains) of $1.55 per share beat the Zacks Consensus Estimate of $1.50 by 3.3%. Earnings were, however, on par with the year-ago profit level and toward the higher end of the expected range of $1.45 to $1.55.
Net revenue of $1.58 billion missed the Zacks Consensus Estimate of $1.61 billion by 1.7%. Net sales also decreased 0.3% year over year due to weakness in the Pottery Barn brands that offset revenue growth at West Elm, its newer businesses ‘Rejuvenation’ and ‘Mark and Graham’ and international company-owned businesses.
Net revenue was within the expected range of $1.6 billion to $1.7 billion.
Comparable Brand Revenues
Comparable brand revenues for the company decreased 0.9% in the quarter, significantly lower than the 4% decrease recorded in the prior quarter and 0.8% growth a year ago.
Comparable brand revenues were within the expected range of negative 1% to 4%. All the brands, except West Elm and William Sonoma, reported soft comparable brand revenues.
Williams-Sonoma brand’s comparable brand revenues were up 1.4%, higher than 0.9% growth in the prior-year quarter.
West Elm’s comparable brand revenues increased 6.5% compared with the 12.8% rise in the prior-year quarter.
Pottery Barn’s comparable brand revenues were down 4.1%, compared with a 2% decrease in the prior-year quarter, which management believes is due to the challenging retail environment.
Pottery Barn Kids’ comparable brand revenues decreased 4.9%, as against 0.1% growth in the year-ago quarter.
PBteen’s comparable brand revenues decreased 8.1% compared with 12.2% decline in the year-ago quarter.
Segment Details
E-commerce: The segment reported net revenue of $809 million in fourth-quarter 2016, up 2.2% year over year.
Retail: The segment reported net revenue of $773 million in the reported quarter, down 2.7% year over year.
Margin Details
Operating margin was 13.6% in the quarter, down 40 basis points from the year-ago quarter.
As a result, adjusted selling, general and administrative (SG&A) expenses were 25.7% as a percentage of revenues or $406 million in the quarter. This represents a 140-bps increase or 5.5% year over year.
Fiscal 2016 Highlights
Full-year adjusted EPS came in at $3.43, up from $3.37 a year ago and above analysts’ expectation of $3.39 a share. Also, adjusted EPS was toward the high end of the company’s expected range of $3.35–$3.45.
Total revenue of $5.08 billion increased 2.2% year over year but missed the Zacks Consensus Estimate of $5.11 billion by 0.5%. Net revenue was toward the low end of the projected $5.1–$5.2 billion range.
Comparable brand revenue grew 0.7% compared with 3.7% growth in the prior year. Comparable brand revenues were below the expected 1–2% range.
Financials
Williams-Sonoma has cash and cash equivalents of $213.7 million as of Jan 29, 2017, compared with $193.6 million as of Jan 31, 2016.
Cash returned to stockholders totaled $69 million in the quarter, comprising $36 million of stock repurchases and $33 million of dividends. In fiscal 2016, the company returned $285 million to stockholders that include $151 million in stock repurchases and $134 million in dividends.
Q1 Guidance
Williams-Sonoma expects first-quarter fiscal 2017 earnings per share in the band of $0.45 to $0.50.
The company expects net revenue for the quarter in the range of $1.085 billion to $1.120 billion. Comparable brand revenues are expected to vary from down 1% to up 2%.
2017 Guidance
Williams-Sonoma expects earnings in the range of $3.45–$3.65 per share.
Net revenue is projected in the range $5.165–$5.265 billion.
Comparable brand revenues are likely to grow in the 1–3% band. The company expects operating margin in the range of 9.4–9.6%. Income tax rate is projected between 36.5% and 37.5%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Williams-Sonoma's stock has a great Growth score of 'A', though it is lagging a lot on the momentum front with a 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Williams-Sonoma (WSM) Up 10.4% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Williams-Sonoma, Inc. (WSM - Free Report) . Shares have added about 10.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Fourth-Quarter Fiscal 2016 Results
Williams-Sonoma’s fourth-quarter fiscal 2016 adjusted earnings (after adjusting for pre-tax gains) of $1.55 per share beat the Zacks Consensus Estimate of $1.50 by 3.3%. Earnings were, however, on par with the year-ago profit level and toward the higher end of the expected range of $1.45 to $1.55.
Net revenue of $1.58 billion missed the Zacks Consensus Estimate of $1.61 billion by 1.7%. Net sales also decreased 0.3% year over year due to weakness in the Pottery Barn brands that offset revenue growth at West Elm, its newer businesses ‘Rejuvenation’ and ‘Mark and Graham’ and international company-owned businesses.
Net revenue was within the expected range of $1.6 billion to $1.7 billion.
Comparable Brand Revenues
Comparable brand revenues for the company decreased 0.9% in the quarter, significantly lower than the 4% decrease recorded in the prior quarter and 0.8% growth a year ago.
Comparable brand revenues were within the expected range of negative 1% to 4%. All the brands, except West Elm and William Sonoma, reported soft comparable brand revenues.
Williams-Sonoma brand’s comparable brand revenues were up 1.4%, higher than 0.9% growth in the prior-year quarter.
West Elm’s comparable brand revenues increased 6.5% compared with the 12.8% rise in the prior-year quarter.
Pottery Barn’s comparable brand revenues were down 4.1%, compared with a 2% decrease in the prior-year quarter, which management believes is due to the challenging retail environment.
Pottery Barn Kids’ comparable brand revenues decreased 4.9%, as against 0.1% growth in the year-ago quarter.
PBteen’s comparable brand revenues decreased 8.1% compared with 12.2% decline in the year-ago quarter.
Segment Details
E-commerce: The segment reported net revenue of $809 million in fourth-quarter 2016, up 2.2% year over year.
Retail: The segment reported net revenue of $773 million in the reported quarter, down 2.7% year over year.
Margin Details
Operating margin was 13.6% in the quarter, down 40 basis points from the year-ago quarter.
As a result, adjusted selling, general and administrative (SG&A) expenses were 25.7% as a percentage of revenues or $406 million in the quarter. This represents a 140-bps increase or 5.5% year over year.
Fiscal 2016 Highlights
Full-year adjusted EPS came in at $3.43, up from $3.37 a year ago and above analysts’ expectation of $3.39 a share. Also, adjusted EPS was toward the high end of the company’s expected range of $3.35–$3.45.
Total revenue of $5.08 billion increased 2.2% year over year but missed the Zacks Consensus Estimate of $5.11 billion by 0.5%. Net revenue was toward the low end of the projected $5.1–$5.2 billion range.
Comparable brand revenue grew 0.7% compared with 3.7% growth in the prior year. Comparable brand revenues were below the expected 1–2% range.
Financials
Williams-Sonoma has cash and cash equivalents of $213.7 million as of Jan 29, 2017, compared with $193.6 million as of Jan 31, 2016.
Cash returned to stockholders totaled $69 million in the quarter, comprising $36 million of stock repurchases and $33 million of dividends. In fiscal 2016, the company returned $285 million to stockholders that include $151 million in stock repurchases and $134 million in dividends.
Q1 Guidance
Williams-Sonoma expects first-quarter fiscal 2017 earnings per share in the band of $0.45 to $0.50.
The company expects net revenue for the quarter in the range of $1.085 billion to $1.120 billion. Comparable brand revenues are expected to vary from down 1% to up 2%.
2017 Guidance
Williams-Sonoma expects earnings in the range of $3.45–$3.65 per share.
Net revenue is projected in the range $5.165–$5.265 billion.
Comparable brand revenues are likely to grow in the 1–3% band. The company expects operating margin in the range of 9.4–9.6%. Income tax rate is projected between 36.5% and 37.5%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Williams-Sonoma, Inc. Price and Consensus
Williams-Sonoma, Inc. Price and Consensus | Williams-Sonoma, Inc. Quote
VGM Scores
At this time, Williams-Sonoma's stock has a great Growth score of 'A', though it is lagging a lot on the momentum front with a 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.