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Williams-Sonoma Q3 Preview: Can Shares Stay Hot?

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The Zacks Retail and Wholesale has struggled in 2022, facing high inflation, down more than 25% and underperforming the general market by a fair margin.

A big-time player in the realm, Williams-Sonoma (WSM - Free Report) , is slated to unveil Q3 earnings on November 17th, after the market close.

Williams-Sonoma, Inc. is a multi-channel specialty retailer of premium quality home products. Incorporated in 1973, the company has five brands, each of which are operating segments.

Currently, the retailer carries a Zacks Rank #3 (Hold) paired with an overall VGM Score of an A.

How does everything else shape up heading into the release? Let’s take a closer look.

Share Performance & Valuation

WSM shares have nearly traded in line with the general market year-to-date, down roughly 18% vs. the S&P 500’s decline of 17%.

Zacks Investment Research
Image Source: Zacks Investment Research

Over the last month, however, WSM shares have tacked on a strong 12% in value, easily outpacing the general market’s 7% gain.

Zacks Investment Research
Image Source: Zacks Investment Research

The strong price action of WSM shares over the last month indicates that buyers have stepped up in a big way.

WSM shares aren’t expensive; the company’s forward earnings multiple sits at 8.0X, well below its 13.8X five-year median and reflecting a sizable 67% discount relative to its Zacks Retail and Wholesale sector.

Further, the company sports a Value Style Score of an A.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarterly Estimates

Two analysts have upped their earnings outlook over the last several months, with the Zacks Consensus EPS Estimate of $3.78 indicating a 14% Y/Y uptick in quarterly earnings.

Zacks Investment Research
Image Source: Zacks Investment Research

The company’s top-line is in solid standing also; the Zacks Consensus Sales Estimate of $2.2 billion suggests a 5.3% Y/Y increase.

Quarterly Performance

Williams-Sonoma has an impressive earnings track record, exceeding the Zacks Consensus EPS Estimate in 19 consecutive quarters. Just in its latest release, the company registered a 9.3% bottom-line beat.

Revenue results have also been mightily strong; WSM has exceeded sales expectations in nine of its last ten quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

Putting Everything Together

WSM shares reside in the red year-to-date but have easily outpaced the general market over the last month.

The company’s shares aren’t expensive, with its forward earnings multiple well beneath its five-year median and Zacks sector average.

Analysts have primarily been bullish in their earnings outlook, with estimates indicating Y/Y increases in both revenue and earnings.

WSM has consistently exceeded quarterly estimates, chaining together a long streak of bottom-line beats.

Heading into the release, Williams-Sonoma (WSM - Free Report) carries a Zacks Rank #3 (Hold) paired with an Earnings ESP Score of -1.2%.


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