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Williams-Sonoma Is Just A Pretty Dividend

Published Wed, 09 Jan 2019 19:48:11 -0500 on Seeking Alpha

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Williams-Sonoma (WSM) has had a rocky half-year or so. The company’s shares languished in the high-$40s for the first half of last year, only to explode higher on rapidly improving sentiment. The stock eventually touched $73 but has fallen precipitously since then and after a strong rebound, shares are still at just $53. While the temptation may be there for value investors to pick up Williams-Sonoma since it is much cheaper than it was recently, I don’t think the time is right just yet. Indeed, the valuation is fair or maybe a bit high, and Williams-Sonoma is just a pretty dividend yield. Those that want to own it should, therefore, wait for a better price/yield combination.

Recent results are okay, but not great The company’s most recent earnings report was okay, but the headline comparable sales number disappointed investors and helped accelerate the selloff that was already in progress. Total revenue was up 4.4% on a comparable sales gain of 3.1%. However, expectations were for comparable sales to rise 4%, and this miss contributed to a sharp decline in the share price.

Source: Earnings release
This table from the press release shows the varying performances of the company’s businesses during the quarter, although the results were largely in line with Q3 last year. West Elm continues to be the rock star of the group, as has been the case for a long time, producing a two-year stacked comparable sales gain of 19.8%.... Read more