Is Williams-Sonoma (WSM) a Great Value Stock Right Now?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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), as well as an A grade for Value. The stock is trading with P/E ratio of 16.35 right now. For comparison, its industry sports an average P/E of 18.03. WSM's Forward P/E has been as high as 24.36 and as low as 13.02, with a median of 17.05, all within the past year.
We should also highlight that WSM has a P/B ratio of 7.45. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. WSM's current P/B looks attractive when compared to its industry's average P/B of 8.60. Over the past 12 months, WSM's P/B has been as high as 8.67 and as low as 4.20, with a median of 5.78.
Finally, we should also recognize that WSM has a P/CF ratio of 14.91. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 20.36. Within the past 12 months, WSM's P/CF has been as high as 17.08 and as low as 9.91, with a median of 12.52.
Value investors will likely look at more than just these metrics, but the above data helps show that Williams-Sonoma is likely undervalued currently. And when considering the strength of its earnings outlook, WSM sticks out at as one of the market's strongest value stocks.
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