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In February 2019, Williams-Sonoma, Inc. (NYSE:WSM) released its most recent earnings announcement, which showed that the business gained from a robust tailwind, eventuating to a double-digit earnings growth of 29%. Below is a brief commentary on my key takeaways on how market analysts view Williams-Sonoma's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts' outlook for the coming year seems rather muted, with earnings climbing by a single digit 7.9%. The following year doesn't look much more exciting, though earnings does reach US$369m in 2022.
Although it is informative understanding the rate of growth year by year relative to today’s value, it may be more valuable evaluating the rate at which the earnings are growing every year, on average. The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of Williams-Sonoma's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 3.8%. This means that, we can expect Williams-Sonoma will grow its earnings by 3.8% every year for the next couple of years.
For Williams-Sonoma, I've put together three relevant factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is WSM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether WSM is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of WSM? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.