It has been about a month since the last earnings report for Williams-Sonoma (WSM Quick QuoteWSM - Free Report) . Shares have added about 6.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Williams-Sonoma 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 drivers.

Williams-Sonoma Q1 Earnings & Revenue Beat Estimates

Williams-Sonoma registered decent results in first-quarter fiscal 2024 (ended Apr 28, 2024). In the quarter, earnings and net revenues beat the Zacks Consensus Estimate. On a year-over-year basis, the top line declined, but the bottom line increased.

Earnings, Revenue & Comps Discussion

Non-GAAP earnings per share (EPS) of $4.07 surpassed the Zacks Consensus Estimate of $2.78 by 46.4%. Also, the metric increased 54.2% from $2.64 reported a year ago.

Net revenues of $1.66 billion topped the consensus mark of $1.65 billion by 0.3% but declined 5.4% year over year.

In the fiscal first quarter, comps fell 4.9% compared with 6% in the year-ago period.

Comps at West Elm brand decreased 4.1% compared with 15.8% reported in the year-ago quarter. Comps at Pottery Barn dipped 10.8% compared with 0.4% reported in the year-ago quarter. Williams-Sonoma comps inched up 0.9% against a 4.4% decline registered in the year-ago quarter. Pottery Barn Kids and Teens comps increased 2.8% against a 3.3% decline reported in the year-ago quarter.

Operating Highlights

The gross margin was 48.3%, up 970 basis points (bps) from the year-ago period’s tally. The increase was due to higher merchandise margins and lower costs from supply-chain efficiencies.

Non-GAAP selling, general and administrative expenses were 28.8% of net revenues, reflecting an increase of 310 bps year over year. The non-GAAP operating margin expanded 600 bps from the year-ago period’s figure to 19.5% for the quarter.

Financials

As of Apr 28, 2024, Williams-Sonoma reported cash and cash equivalents of $1.25 billion, down from $1.26 billion in the fiscal 2023 end. Net cash from operating activities totaled $226.8 million in the first three months of the fiscal 2024 compared with $342.5 million a year ago.

Fiscal 2024 Guidance Raised

Williams-Sonoma still anticipates fiscal 2024 net revenues to be in the range of -3% to +3%. Comps for the year are expected to be in the range of -4.5% to +1.5%.

The company now expects its operating margin to be between 17.6% and 18% (versus earlier expectations of 16.5% and 16.8%).

For the long term, the company still projects mid-to-high-single-digit annual net revenue growth and an operating margin in the mid-to-high teens.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, Williams-Sonoma has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Williams-Sonoma has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.