Williams-Sonoma is a specialty retailer of products for the home with some brands in home furnishings. The Company operates in two segments: ecommerce and retail. The company was founded in 1956 and is based in San Francisco, California.
WSM Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for WSM, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Williams Sonoma Inc ranked in the 72th percentile in terms of potential gain offered. Moreover, under all the scenarios we modelled, the output consistently forecasted positive returns. The most interesting components of our discounted cash flow analysis for Williams Sonoma Inc ended up being:
WSM's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 3%; for context, that number is higher than 27.43% of tickers in our DCF set.
Williams Sonoma Inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 46.45. This coverage rate is greater than that of 92.93% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Relative to other stocks in its sector (Consumer Cyclical), Williams Sonoma Inc has a reliance on debt greater than only 19.77% of them.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
MGA, VIAC, IPG, ANF, and DISCA can be thought of as valuation peers to WSM, in the sense that they are in the Consumer Cyclical sector and have a similar price forecast based on DCF valuation.
Morgan Stanley analysts revisited the entire Hardline, Broadline, and Food retail category with two upgrades and four downgrades. The Retail Analyst: Simeon Gutman upgraded: Sally Beauty Holdings, Inc. (NYSE: SBH ) from Underweight to Equal-Weight, price target lifted from $9 to $13. Williams-Sonoma, Inc. (NYSE: WSM ) from Underweight to Equal-Weight, price target lifted from $95 to $130. The Sally Beauty Thesis: Sally Beauty operates in a defensive business category that should see growth in 2021, Gutman wrote in the note. The stock also notably underperformed the retail sector in 2020 as it fell 30% versus a 33% market-cap-weighted gain for the retail group. Investors are likely to look at Sally Beauty as both a "reopening winner" and "value" stock amid an improving economic environme...