Should Value Investors Buy Williams-Sonoma (WSM) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Williams-Sonoma (WSM). WSM is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 14.28. This compares to its industry's average Forward P/E of 17.12. Over the past year, WSM's Forward P/E has been as high as 20.61 and as low as 13.02, with a median of 16.32.
Investors should also recognize that WSM has a P/B ratio of 8.55. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 9.41. Over the past year, WSM's P/B has been as high as 9.71 and as low as 4.91, with a median of 5.98.
Finally, we should also recognize that WSM has a P/CF ratio of 12.23. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 21.33. WSM's P/CF has been as high as 17.06 and as low as 9.91, with a median of 12.37, all within the past year.
These are only a few of the key metrics included in Williams-Sonoma's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, WSM looks like an impressive value stock at the moment.
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WilliamsSonoma, Inc. (WSM) : Free Stock Analysis Report
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