Williams-Sonoma Inc (WSM, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $152.67, Williams-Sonoma Inc has witnessed a daily gain of 9.04%, marked against a three-month change of 27.41%. A thorough analysis, underlined by the GF Score, suggests that Williams-Sonoma Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Williams-Sonoma Inc's GF Score components are as follows:
- Financial strength rank: 6/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 6/10
- Momentum rank: 8/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high profitability rank and a slightly lower financial strength rank, GuruFocus assigned Williams-Sonoma Inc the GF Score of 94 out of 100, which signals the highest outperformance potential.
Williams-Sonoma Inc: A Snapshot
Williams-Sonoma Inc, with a market cap of $9.79 billion and sales of $8.26 billion, is a leader in the $300 billion domestic home category. The company has a wide retail and direct-to-consumer presence, focused on expanding its exposure in the B2B, marketplace, and franchise areas. Its operating margin stands at 15.49%. The company's portfolio includes high-end cooking essentials provider Williams-Sonoma (175 stores), casual home accessories provider Pottery Barn (189), and emerging concept for young professionals West Elm (121), among others.
Financial Strength Analysis
According to the Financial Strength rating, Williams-Sonoma Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. With a favorable Debt-to-Revenue ratio of 0.17, Williams-Sonoma Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Williams-Sonoma Inc's impressive standing among its peers in generating profit. Williams-Sonoma Inc Operating Margin has increased (101.45%) over the past five years, as shown by the following data: 2019: 7.69; 2020: 7.90; 2021: 13.43; 2022: 17.62; 2023: 17.27. Furthermore, Williams-Sonoma Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2019: 37.04; 2020: 36.27; 2021: 38.86; 2022: 44.05; 2023: 42.40. This trend underscores the company's growing proficiency in transforming revenue into profit. Williams-Sonoma Inc's strong Predictability Rank of 3.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Williams-Sonoma Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 19%, which outperforms better than 81.39% of 1048 companies in the Retail - Cyclical industry. Moreover, Williams-Sonoma Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 44.3, and the rate over the past five years is 32. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Williams-Sonoma Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health, consistent profitability, and impressive growth, making it a compelling investment opportunity.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
