Shares are down 46.2% on the year, probably driven by the decline of similar magnitude in the overall market, as well as by lower earnings per share compared to the same quarter one year earlier. The fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
We've downgraded home products retailer Williams-Sonoma (WSM - Get Report) from hold to sell, driven by its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.
Williams-Sonoma experienced a steep decline in earnings per share of 140% in the most recent quarter in comparison with its performance from the same quarter a year ago. Earnings per share have declined over the last two years, and we anticipate that this should continue in the coming year. During the past fiscal year, the company reported lower earnings of $1.79 vs. $1.81 in the prior year. For the next year, the market is expecting a contraction of 87.7% in earnings to 22 cents. Net income has significantly decreased by 140.6% compared with the same quarter a year ago, underperforming the specialty retail industry and the S&P 500. Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. On the basis of ROE, Williams-Sonoma has underperformed the industry but outperformed the S&P 500.
Revenue fell by 16% since the same quarter a year ago, underperforming the industry average. Shares are down 71.7% on the year, which is worse than the decline in the S&P 500. The fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.Other ratings changes include Kenneth Cole Productions (KCP) and Supreme Industries (STS - Get Report), both downgraded from hold to sell. All ratings changes generated on Dec. 5 are listed below.
|ADS||Alliance Data Systems||HOLD||Downgrade||BUY|
|FCBN||First Citizens Bancorp||SELL||Downgrade||HOLD|
|NFG||National Fuel Gas||HOLD||Downgrade||BUY|
|WEL||Boots & Coots||HOLD||Downgrade||BUY|
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