Williams-Sonoma (NYSE: WSM) stock price is doing well as investors cheer the company’s strong performance and execution. It has surged by almost 500% and 140% in the past five years and 12 months, respectively. It has constantly beaten the broader Nasdaq 100, S&P 500 indices and the SPDR Retail ETF (XRT).
WSM vs XRT ETF vs Nasdaq 100 vs S&P 500
WSM has been a visionary brandWilliams-Sonoma is one of the most visionary brands in America’s retail sector. The company owns brands that cater for most people in the US. Some of these brands are the eponymous Williams-Sonoma business, Mark and Graham, Pottery Barn, and Pottery Barn Kids.
WSM has been a visionary brand for a long time. In addition, to cater for people of all ages, it was one of the first retailers to focus on e-commerce. These investments paid off during the Covid-19 pandemic as sales soared to $6.7 billion in 2020 followed by $8.25 billion in 2021.
Online sales have accounted for over 50% of its total revenue for a long time. This percentage jumped to 66% in 2022 and is expected to continue growing over time.
Williams-Sonoma stock price continued soaring after the company published strong financial results. Its revenue came in at $2.2 billion, a 6.9% YoY decline, which was attributed to a sharp decline in furniture sales. Most of the weakness was in its West Elm brand.
For the year, Williams-Sonoma’s revenue came in at over $7.75 billion, helped by higher demand for home furnishings products. Its comparable store sales dropped by 9.9% while its operating income rsoe to $1.27 billion.
In line with this performance, the company decided to boost its shareholder returns. It started a new $1 billion share repurchase program and increased its dividend payouts by 26%. It has paid back over $3.8 billion to its shareholders in the past six years and increased its payouts for 15 years.
There are other reasons why Williams-Sonoma is doing well. Unlike other retailers, it has one of the best balance sheets in the industry. It has over $1.2 billion in cash and no long-term or short-term debt. This means that the firm is benefiting slightly in this high-interest rate environment. It brought in $13 million in interest income in 2023.
The only challenge is that the company is not cheap. WSM trades at a forward PE multiple of 19.50, higher than the sector median of 15.7% and its five-year average of 12.6%. Its forward EV to EBITDA ratio has moved to 12.42, also higher than the five-year average of 8.4.
Williams-Sonoma stock price forecast
The weekly chart shows that the WSM stock price has gone parabolic in the past few years. This rebound continued after the stock soared above the crucial resistance point at $211.35, its highest point in November 2021.
The stock has remained above all moving averages. Also, the Relative Strength Index (RSI) and the Percentage Price Oscillator (PPO) have continued soaring.
Therefore, the outlook for the Williams-Sonoma share price is bullish, with the next target to watch will be at $300. The other possible scenario is where the stock retreats and retests the support at $211 and then resumes the bullish trend.
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