Are Investors Undervaluing Williams-Sonoma (WSM) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company to watch right now is Williams-Sonoma (WSM). WSM is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Another notable valuation metric for WSM is its P/B ratio of 4.07. 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 stock's P/B looks solid versus its industry's average P/B of 4.16. Over the past year, WSM's P/B has been as high as 5.44 and as low as 3.28, with a median of 4.07.
Finally, we should also recognize that WSM has a P/CF ratio of 9.54. 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. WSM's P/CF compares to its industry's average P/CF of 12.67. Over the past year, WSM's P/CF has been as high as 14.28 and as low as 8.51, with a median of 10.33.
These are just a handful of the figures considered in Williams-Sonoma's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that WSM is an impressive value stock right now.
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