Williams Sonoma Inc (WSM) stock analysis

P/E above its 5-year median

Williams Sonoma's P/E of 26.8 is above its own 5-year median of 17.1.

P/E above the industry

Williams Sonoma's P/E of 26.8 is above the Consumer discretionary median of 19.6.

EV/EBITDA above its 5-year median

Williams Sonoma's EV/EBITDA of 16.9 is above its 5-year median of 10.4.

P/B above the industry

Williams Sonoma's price-to-book of 14.42 is above the Consumer discretionary median of 4.85.

Trading above fair value

The share price of $262.09 is above our fair value estimate of $156.69.

Margin of safety under 20%

The price is 67.3% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew -3.5% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 2.7% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 4.6% over the last twelve months, against a 5-year average of 9.8% a year.

Growing slower than the industry

Revenue grew 2.2% over the last twelve months; the Consumer discretionary median is 2.2%.

Guidance raised

Williams Sonoma raised its fiscal 2026 annual net revenues outlook on Aug 26, 2026.

Gross margin improving

Gross margin was 47.2% over the last twelve months, against 46.2% a year earlier.

Return on equity over 15%

Return on equity was 55.0% over the last twelve months and averaged 57.8% over five years.

Return on capital over 10%

Return on invested capital was 101%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Williams Sonoma's return on equity of 55.0% is above the Consumer discretionary median of 15.7%.

Earnings grew over 5 years

Net income grew 9.8% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 14.7% over the last twelve months, against a 5-year average of 13.5%.

Net margin above the industry

Williams Sonoma's net margin of 14.7% is above the Consumer discretionary median of 3.1%.

No debt

Williams Sonoma has no borrowings on its latest balance sheet.

Debt not rising

With no debt today, leverage cannot have risen.

Debt covered by cash flow

There is no debt to cover.

Interest well covered

No meaningful interest expense to cover.

Short-term assets cover short-term debts

Current assets are 1.45 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 8.47; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Williams Sonoma paid dividends worth 1.1% of the share price over the last twelve months.

Yield below Treasuries

The 1.1% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Williams Sonoma yields 1.1%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 28.5% of net income.

Covered by free cash flow

Dividends take 25.0% of free cash flow.