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Here's Why Williams-Sonoma (WSM) Stock is a Must Buy Now
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Williams-Sonoma, Inc.’s (WSM - Free Report) e-commerce channel, innovative efforts, investment in merchandising of brands and digital marketing have been driving the company’s performance. Notably, shares of Williams-Sonoma have gained 61.9% over the past year compared with its industry’s 57.9% rally.
The price performance was backed by a solid earnings surprise history, having surpassed the Zacks Consensus Estimate in the trailing 12 quarters. Earnings estimates for fiscal 2020 and 2021 have moved 25.5% and 23.9% upward, respectively, over the past 30 days. This positive trend signifies bullish analysts’ sentiments and justifies the company’s Zacks Rank #1 (Strong Buy), indicating robust fundamentals and the expectation of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.
Later last month, Williams-Sonoma reported third-quarter fiscal 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate by 68.4% and 13.5%, respectively. Earnings and revenues grew 150% and 22.3% year over year, respectively, courtesy of 24.4% comps growth backed by 49.3% notable acceleration in net comps growth of the e-commerce business.
Major Growth Drivers
Strong E-commerce Penetration: Williams-Sonoma, which shares industry space with RH (RH - Free Report) , At Home Group Inc. and Tempur Sealy International, Inc. (TPX - Free Report) , is one of the largest e-commerce retailers in the United States. The company has a history of driving market share gains, supported by strong e-commerce websites, direct mail catalogs and retail stores along with shipping fees received for the delivery of merchandise. Its innovative efforts have helped the company to drive e-commerce growth. E-commerce penetration accounted for 70% of total revenues for third-quarter fiscal 2020, buoyed by content-rich online experience and marketing strategies. Again, during the quarter, the company witnessed solid ecommerce sales growth of 49.3%. This highlights the digital-first nature of Williams-Sonoma’s business.
Solid Cost Control: Disciplined cost control, lower advertising and payroll, along with higher merchandise and occupancy leverage have been helping the company boost margins. Although higher shipping costs due to increased e-commerce sales have been weighing on margins, its focus on innovation, and marketing and digitalization techniques is proving profitable. Non-GAAP gross margin expanded 400 basis points (bps) in the fiscal third quarter backed by higher merchandise and occupancy leverage in the quarter. Non-GAAP selling, general and administrative expenses improved 410 bps and non-GAAP operating margin expanded 810 bps from the year-ago period in the quarter.
Superior ROE: Williams-Sonoma’s return on equity (ROE) is indicative of growth potential. The company’s ROE of 44.1% compares favorably with the industry average of 18.7%, implying that it is efficient in using its shareholders’ funds.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Here's Why Williams-Sonoma (WSM) Stock is a Must Buy Now
Williams-Sonoma, Inc.’s (WSM - Free Report) e-commerce channel, innovative efforts, investment in merchandising of brands and digital marketing have been driving the company’s performance. Notably, shares of Williams-Sonoma have gained 61.9% over the past year compared with its industry’s 57.9% rally.
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The price performance was backed by a solid earnings surprise history, having surpassed the Zacks Consensus Estimate in the trailing 12 quarters. Earnings estimates for fiscal 2020 and 2021 have moved 25.5% and 23.9% upward, respectively, over the past 30 days. This positive trend signifies bullish analysts’ sentiments and justifies the company’s Zacks Rank #1 (Strong Buy), indicating robust fundamentals and the expectation of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.
Later last month, Williams-Sonoma reported third-quarter fiscal 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate by 68.4% and 13.5%, respectively. Earnings and revenues grew 150% and 22.3% year over year, respectively, courtesy of 24.4% comps growth backed by 49.3% notable acceleration in net comps growth of the e-commerce business.
Major Growth Drivers
Strong E-commerce Penetration: Williams-Sonoma, which shares industry space with RH (RH - Free Report) , At Home Group Inc. and Tempur Sealy International, Inc. (TPX - Free Report) , is one of the largest e-commerce retailers in the United States. The company has a history of driving market share gains, supported by strong e-commerce websites, direct mail catalogs and retail stores along with shipping fees received for the delivery of merchandise. Its innovative efforts have helped the company to drive e-commerce growth. E-commerce penetration accounted for 70% of total revenues for third-quarter fiscal 2020, buoyed by content-rich online experience and marketing strategies. Again, during the quarter, the company witnessed solid ecommerce sales growth of 49.3%. This highlights the digital-first nature of Williams-Sonoma’s business.
Solid Cost Control: Disciplined cost control, lower advertising and payroll, along with higher merchandise and occupancy leverage have been helping the company boost margins. Although higher shipping costs due to increased e-commerce sales have been weighing on margins, its focus on innovation, and marketing and digitalization techniques is proving profitable. Non-GAAP gross margin expanded 400 basis points (bps) in the fiscal third quarter backed by higher merchandise and occupancy leverage in the quarter. Non-GAAP selling, general and administrative expenses improved 410 bps and non-GAAP operating margin expanded 810 bps from the year-ago period in the quarter.
Superior ROE: Williams-Sonoma’s return on equity (ROE) is indicative of growth potential. The company’s ROE of 44.1% compares favorably with the industry average of 18.7%, implying that it is efficient in using its shareholders’ funds.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>