NYSE:WSM is probably undervalued for the fundamentals it is displaying.

Discover WILLIAMS-SONOMA INC (NYSE:WSM)—an undervalued stock our stock screener has picked out. NYSE:WSM demonstrates solid fundamentals, including health and profitability, all while staying attractively priced. Let's explore the details.

Assessing Valuation Metrics for NYSE:WSM

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NYSE:WSM has received a 9 out of 10:

• A Price/Earnings ratio of 9.78 indicates a reasonable valuation of WSM.
• WSM's Price/Earnings ratio is rather cheap when compared to the industry. WSM is cheaper than 84.80% of the companies in the same industry.
• When comparing the Price/Earnings ratio of WSM to the average of the S&P500 Index (28.91), we can say WSM is valued rather cheaply.
• WSM is valuated reasonably with a Price/Forward Earnings ratio of 9.18.
• 84.00% of the companies in the same industry are more expensive than WSM, based on the Price/Forward Earnings ratio.
• WSM is valuated cheaply when we compare the Price/Forward Earnings ratio to 20.49, which is the current average of the S&P500 Index.
• Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of WSM indicates a rather cheap valuation: WSM is cheaper than 84.80% of the companies listed in the same industry.
• Based on the Price/Free Cash Flow ratio, WSM is valued cheaper than 88.00% of the companies in the same industry.
• The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• WSM has an outstanding profitability rating, which may justify a higher PE ratio.

What does the Profitability looks like for NYSE:WSM

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:WSM scores a 9 out of 10:

• WSM's Return On Assets of 20.52% is amongst the best of the industry. WSM outperforms 97.60% of its industry peers.
• The Return On Equity of WSM (47.92%) is better than 92.00% of its industry peers.
• WSM has a better Return On Invested Capital (29.79%) than 96.00% of its industry peers.
• Measured over the past 3 years, the Average Return On Invested Capital for WSM is significantly above the industry average of 13.88%.
• The 3 year average ROIC (34.32%) for WSM is well above the current ROIC(29.79%). The reason for the recent decline needs to be investigated.
• WSM has a better Profit Margin (13.83%) than 96.80% of its industry peers.
• In the last couple of years the Profit Margin of WSM has grown nicely.
• The Operating Margin of WSM (17.88%) is better than 95.20% of its industry peers.
• In the last couple of years the Operating Margin of WSM has grown nicely.
• With a decent Gross Margin value of 44.82%, WSM is doing good in the industry, outperforming 71.20% of the companies in the same industry.
• In the last couple of years the Gross Margin of WSM has grown nicely.

Evaluating Health: NYSE:WSM

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NYSE:WSM scores a 9 out of 10:

• An Altman-Z score of 5.05 indicates that WSM is not in any danger for bankruptcy at the moment.
• WSM has a better Altman-Z score (5.05) than 86.40% of its industry peers.
• There is no outstanding debt for WSM. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
• With a decent Quick ratio value of 0.85, WSM is doing good in the industry, outperforming 67.20% of the companies in the same industry.
• WSM does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Analyzing Growth Metrics

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NYSE:WSM was assigned a score of 4 for growth:

• WSM shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 26.54% yearly.
• The Earnings Per Share is expected to grow by 9.47% on average over the next years. This is quite good.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

Our latest full fundamental report of WSM contains the most current fundamental analsysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.