NEW YORK (TheStreet) -- Shares of Williams-Sonoma Inc (WSM) were rising, up 2.07% to $80.87 in early market trading Friday, after analysts at Oppenheimer issued a positive note on the home goods retailer this morning.
The firm upgraded the company to "outperform" from "perform" with a price target of $90, citing the recent upticks in home sales and household formation.
Oppenheimer analysts added that they see potential as demand trends in the industry continue to improve.
San Francisco, Calif.-based Williams-Sonoma is a multi-channel specialty retailer of products for the home with brands in home furnishings.
Separately, TheStreet Ratings team rates WILLIAMS-SONOMA INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate WILLIAMS-SONOMA INC (WSM) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- WILLIAMS-SONOMA INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($3.48 versus $3.26).
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.
- WSM's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.17 is very weak and demonstrates a lack of ability to pay short-term obligations.
- 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. In comparison to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, WILLIAMS-SONOMA INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- You can view the full analysis from the report here: WSM Ratings Report