Look for Williams-Sonoma Sales and Shares to Pick Up

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Williams-Sonoma Inc. (NYSE:WSM) is specialty retailer that many shoppers are familiar with. It is generally one of those store brands that parents avoid bringing their children into, given the expensive and often fragile home merchandise available. The company is quite profitable, and the stock is up 17 percent year-to-date. The company specifically operates in two segments: Direct-to-Customer and Retail. It offers cooking, dining, and entertaining products, including cookware, tools, electrics, cutlery, tabletop and bar, outdoor, furniture, and a library of cookbooks essentials under the Williams-Sonoma brand.

It also offers furniture, bedding, bathroom accessories, rugs, curtains, lighting, tabletop, outdoor, and decorative accessories under the Pottery Barn brand. It further has products designed for creating spaces where children can play, laugh, learn, and grow under the Pottery Barn Kids brand. The company also provides an assortment of products under the West Elm brand, as well as a line of furniture, bedding, lighting, decorative accents, and others for teen bedrooms, dorm rooms, study spaces, and lounges under the PBteen brand.

In addition, it offers lighting and home goods product lines, including lights, hardware, furniture, and home décor that span periods back to the 1870s under the Mark and Graham brand. The company markets its products through e-commerce websites, direct-mail catalogs, and specialty retail stores. The stock is attractively priced at 23 times earnings; it is not too cheap nor too expensive. Can the stock move higher from here? An analysis of the company’s recent performance can help answer this question.

In the last quarter, net revenues grew 9.7 percent to $974 million versus $888 million in the prior-year quarter, with comparable brand revenue growth of 10 percent. Operating income grew 16.5 percent to $74 million and operating margin was 7.6 percent versus 7.2 percent in last year’s quarter. Non-GAAP operating income grew 11.4 percent. Diluted earnings per share grew 20 percent to 48 cents. Non-GAAP earnings per share grew 17.1 percent. Comparable brand revenue growth increased 10 percent on top of 7.2 percent last year.