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Should Value Investors Buy Williams-Sonoma (WSM) Stock?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Williams-Sonoma (WSM - Free Report) . WSM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 13.25. This compares to its industry's average Forward P/E of 16.19. Over the past year, WSM's Forward P/E has been as high as 20.61 and as low as 13.02, with a median of 15.89.

We should also highlight that WSM has a P/B ratio of 7.99. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 8.98. Over the past year, WSM's P/B has been as high as 9.71 and as low as 4.91, with a median of 6.07.

Finally, we should also recognize that WSM has a P/CF ratio of 11.43. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. WSM's P/CF compares to its industry's average P/CF of 20.36. Within the past 12 months, WSM's P/CF has been as high as 17.06 and as low as 9.91, with a median of 12.26.

These are just a handful of the figures considered in Williams-Sonoma's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that WSM is an impressive value stock right now.


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