WILLIAMS-SONOMA INC (NYSE:WSM) – A Strong Candidate for GARP Investors

WILLIAMS-SONOMA INC (NYSE:WSM) emerged from our Peter Lynch-inspired screen as a stock with attractive growth potential and reasonable valuation. The company, known for its home products retail brands like Williams Sonoma, Pottery Barn, and West Elm, demonstrates solid financial health and profitability—key traits for long-term investors seeking steady growth.

Why WSM Fits the GARP Approach

• Earnings Growth: Over the past five years, WSM has delivered an impressive average annual EPS growth of 29.28%, well above the 15% threshold in Lynch’s strategy.
• Strong Profitability: The company’s return on equity (ROE) stands at 52.52%, indicating efficient use of shareholder capital.
• Healthy Balance Sheet: With no debt (Debt/Equity = 0) and a current ratio of 1.44, WSM maintains financial stability.
• Reasonable Valuation: Despite its strong growth, WSM trades at a P/E ratio of 18.38, below the industry average, suggesting it is not overpriced.

Fundamental Strengths

Our fundamental analysis report rates WSM highly for profitability and financial health, with a score of 7 out of 10. Key highlights include:

• High Margins: Operating margin of 18.55% and profit margin of 14.59% outperform most peers.
• Cash Flow Stability: Consistent positive cash flows over the past five years.
• Dividend Reliability: A 1.64% yield with a sustainable payout ratio of 24.89%.

While revenue growth has slowed recently, WSM’s strong brand portfolio and efficient operations position it well for sustained performance.

For more stocks matching the Peter Lynch criteria, explore our Peter Lynch Strategy screener.

Disclaimer

This is not investing advice. Always conduct your own research before making investment decisions.