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Williams-Sonoma (WSM) to Report Q2 Earnings: What's Up?

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Williams-Sonoma, Inc. (WSM - Free Report) is expected to report second-quarter fiscal 2019 results on Aug 28, after the closing bell.

In the last reported quarter, earnings and revenues topped the Zacks Consensus Estimate by 19.1% and 1.6%, respectively. In fact, its earnings surpassed estimates in all the trailing four quarters, with the average being 10.01%.

Also, fiscal first-quarter earnings and revenues increased 21% and 3.2%, respectively, on a year-over-year basis.

Which Way are Estimates Trending?

Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release.

For the quarter to be reported, the Zacks Consensus Estimate has remained unchanged over the past 60 days at 83 cents per share. This indicates an increase of 7.8% from the year-ago reported earnings of 77 cents per share. Revenues are expected to be $1.31 billion, suggesting a 2.5% year-over-year increase.

Williams-Sonoma, Inc. Price and EPS Surprise

Williams-Sonoma, Inc. Price and EPS Surprise

Williams-Sonoma, Inc. price-eps-surprise | Williams-Sonoma, Inc. Quote

Factors at Play

Williams-Sonoma’s sales and earnings growth is expected to be moderate in the quarter to be reported.

While slowing macro environment, relentless competition, tariffs and tough comparisons are pressing concerns, the company’s cross-brand initiatives and momentum in the West Elm brand should drive consolidated comps. Again, the multi-channel multi-brand platform, strong e-commerce growth, solid execution of strategic initiatives and digital leadership, product innovation, retail transformation, along with operational excellence across businesses are expected to provide some support to the company’s top line.

Meanwhile, higher shipping costs are also expected to pressurize its margins in the to-be-reported quarter. Increased digital advertising investments and higher labor costs also remain pressing concerns.

What the Zacks Model Says

Our proven model does not show that Williams-Sonoma is likely to beat estimates in the quarter to be reported. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%.

Zacks Rank: It currently carries a Zacks Rank #2, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are a few stocks in the Zacks Retail-Wholesale sector, which have the right combination of elements to beat estimates in their respective quarters to be reported.

Dollar Tree, Inc. (DLTR - Free Report) has an Earnings ESP of +7.91% and a Zacks Rank #3.

Dollar General Corporation (DG - Free Report) has an Earnings ESP of +2.64% and a Zacks Rank #3.

Costco Wholesale Corporation (COST - Free Report) has an Earnings ESP of +0.30% and a Zacks Rank #3.

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