Shares of Williams-Sonoma, Inc. (NYSE:WSM) have outperformed the industry it belongs to in the past three months. The stock has gained 13.1% as compared to the industry’s 10.6%.
Moreover, northward movement in earnings estimates for the current quarter and year reflects analysts’ optimism on the stock’s prospects. Over the past three months, current quarter and year earnings estimates have inched up 2.4% and 0.8%, respectively. The company also posted positive earnings surprises in each of the trailing four quarters, the average beat being 3.89%.
Driven by a few other positives, the prospects for this Zacks Rank #2 (Buy) company look promising.
What Makes Williams-Sonoma a Solid Pick?
Earnings and Revenue Growth: Arguably, earnings growth is of utmost importance for determining a stock’s potential as surging profit levels are often indicative of strong prospects (and stock price gains). For the current year, Williams-Sonoma’s earnings per share are expected to grow 4.7%, higher than the industry average of 1.6%. Moreover, year-over-year sales growth for the current year is expected at more than 3%.
Focus on Transformation: Apart from innovative moves to match the changing preference of consumers, Williams-Sonoma is in the middle of a transformation drive to address the slowdown in traffic and to attract customers. Toward this end, the company has been reworking on its marketing strategy, focusing more on digital targeted marketing and investing in remodeling of stores. These initiatives should aid in combating the traffic decline and driving the top line.
Return on Equity (ROE): Williams-Sonoma delivered return on equity (ROE) of 25.4% in the trailing 12 months compared with the industry’s gain of 9.6%. This supports its growth potential and indicates that the company reinvests more efficiently compared to its peers.
VGM Score: Williams-Sonoma has a VGM Score of A. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 make solid investment choices.
Other Stocks to Consider
Other top-ranked stocks in the Zacks Retail-Wholesale sector are Restoration Hardware Holdings Inc. (NYSE:RH) , Conn's, Inc. (NASDAQ:CONN) and Kirkland's, Inc. (NASDAQ:KIRK) .
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Restoration Hardware sports a Zacks Rank #1. The company’s current-year earnings are expected to increase more than 100%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Conn's also flaunts a Zacks Rank #1 with current-year earnings expected to increase a whopping 386.4%.
Kirkland's carries a Zacks Rank #2. The company has witnessed an upward earnings estimate revision of 7.5% for the current year, in the last two months.
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