Williams-Sonoma (WSM) Up 6.9% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Williams-Sonoma (WSM). Shares have added about 6.9% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Williams-Sonoma due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.WSM’s Q2 Earnings & Revenue Beat, FY25 View UpWilliams-Sonoma reported results for the second-quarter fiscal 2025 (ended Aug. 3), with earnings and net revenues beating the Zacks Consensus Estimate and increasing year over year.The quarter’s performance was driven by positive comps in both furniture and non-furniture, and strong performance in its retail and ecommerce channels. Robust trends led to the company raising its fiscal 2025 guidance.With a strong omnichannel platform and infrastructure, going forward, the company expects to beat its expectations and multiply growth across its brands, despite macro challenges.Earnings, Revenues & Comps DiscussionThe company reported earnings of $2 per share, which beat the Zacks Consensus Estimate of $1.79 by 11.7%. In the prior-year quarter, it reported earnings per share (EPS) of $1.74.Net revenues of $1.84 billion also topped the consensus mark of $1.82 billion by 1.1% and grew 2.8% year over year.In the quarter, comps were up 3.7% against a negative 3.3% in the year-ago period.Comps at Williams-Sonoma increased 5.1% against a 0.8% decline reported in the year-ago quarter. Comps at West Elm gained 3.3% against a 4.8% decline reported in the year-ago quarter. Pottery Barn Kids and Teens comps grew 5.3% compared with 1.5% reported in the year-ago quarter. On the other hand, Pottery Barn comps inched up 1.1% against a 7.1% decline reported in the year-ago quarter.Operating HighlightsThe gross margin was 47.1%, which expanded 220 basis points (bps) year over year. The increase was due to higher merchandise margins and supply-chain efficiencies.Selling, general and administrative expenses were 29.2% of net revenues, reflecting a decline of 20 bps year over year due to lower advertising and general expenses, partially offset by higher performance-based incentive compensation.The operating margin expanded 240 bps from the year-ago figure to 17.9% for the quarter.FinancialsAs of Aug. 3, 2025, Williams-Sonoma reported cash and cash equivalents of $985.8 billion, up from $1.21 billion at the fiscal 2024-end.Net cash from operating activities totaled $401.7 million in the first six months of fiscal 2025 compared with $473.3 million a year ago. This allowed the company to return nearly $280 million to its shareholders through $199 million in stock repurchases and $81 million in dividends.Raises Fiscal 2025 GuidanceLooking ahead, fiscal 2025 will be a 52-week year compared with 53 weeks in fiscal 2024. WSM now projects annual net revenues in the range of +0.5% to +3.5% (from -1.5% to +1.5%), with comparable brand revenue growth now expected to be between +2.0% and +5.0% (from flat to +3.0%).The company expects incremental tariff costs to impact net revenues, including the additional tariffs on China of 30%, India of 50%, Vietnam of 20%, an average tariff on the rest of the world of 18%, as well as the steel and aluminum tariff of 50% and the copper tariff of 50%.Operating margin guidance still stands between 17.4% and 17.8%.Over the long term, the company anticipates mid-to-high single-digit net revenue growth and operating margins in the mid-to-high teens.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in estimates revision.VGM ScoresAt this time, Williams-Sonoma has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Williams-Sonoma has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Williams-Sonoma, Inc. (WSM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks