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TheStreet Open House

How Will Williams-Sonoma (WSM) Stock Be Affected By This Upgrade?

NEW YORK (TheStreet) -- Williams-Sonoma (WSM) is Citigroup's (C) top retailer for the back to school season, according to its consumer report released today.

The distinction centers on the retailer's Pottery Barn unit which Citi sees as primed to drive revenue as parents shop for back to school furnishings for their children.

Shares of Williams-Sonoma are slightly higher in early market trade.

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TheStreet Ratings team rates WILLIAMS-SONOMA INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate WILLIAMS-SONOMA INC (WSM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.3%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • WILLIAMS-SONOMA INC has improved earnings per share by 20.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WILLIAMS-SONOMA INC increased its bottom line by earning $2.85 versus $2.56 in the prior year. This year, the market expects an improvement in earnings ($3.20 versus $2.85).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 17.0% when compared to the same quarter one year prior, going from $39.47 million to $46.16 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, WILLIAMS-SONOMA INC's return on equity exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: WSM Ratings Report
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