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Is Williams-Sonoma (WSM) a Great Value Stock Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

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 is trading with a P/E ratio of 13.67, which compares to its industry's average of 16.89. Over the last 12 months, WSM's Forward P/E has been as high as 20.61 and as low as 13.02, with a median of 16.55.

Another valuation metric that we should highlight is WSM's P/B ratio of 8.19. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 9.30. 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 5.91.

Finally, our model also underscores that WSM has a P/CF ratio of 11.72. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. WSM's P/CF compares to its industry's average P/CF of 20.62. Over the past 52 weeks, WSM's P/CF has been as high as 17.06 and as low as 9.91, with a median of 12.46.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Williams-Sonoma is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, WSM feels like a great value stock at the moment.


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