Trade-Ideas: Williams-Sonoma (WSM) Is Today's "Water-Logged And Getting Wetter" Stock
Trade-Ideas LLC identified
(
) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Williams-Sonoma as such a stock due to the following factors:
- WSM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $86.5 million.
- WSM has traded 1.6 million shares today.
- WSM traded in a range 225.5% of the normal price range with a price range of $4.23.
- WSM traded below its daily resistance level (quality: 375 days, meaning that the stock is crossing a resistance level set by the last 375 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.
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More details on WSM:
Williams-Sonoma Inc. operates as a multi-channel specialty retailer of home products. The company operates in two segments, E-commerce and Retail. The stock currently has a dividend yield of 2.1%. WSM has a PE ratio of 2. Currently there are 9 analysts that rate Williams-Sonoma a buy, no analysts rate it a sell, and 12 rate it a hold.
The average volume for Williams-Sonoma has been 1.1 million shares per day over the past 30 days. Williams-Sonoma has a market cap of $6.1 billion and is part of the services sector and retail industry. The stock has a beta of 0.61 and a short float of 7.1% with 4.82 days to cover. Shares are down 10.3% year-to-date as of the close of trading on Monday.
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Analysis:
rates Williams-Sonoma as a
. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, revenue growth, reasonable valuation levels and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the ratings report include:
- WILLIAMS-SONOMA INC has improved earnings per share by 9.4% 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 $3.26 versus $2.85 in the prior year. This year, the market expects an improvement in earnings ($3.45 versus $3.26).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 5.8% when compared to the same quarter one year prior, going from $50.75 million to $53.67 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.6%. Since the same quarter one year prior, revenues slightly increased by 8.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has increased to $103.88 million or 28.96% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.31%.
- You can view the full Williams-Sonoma Ratings Report.
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