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

WILLIAMS-SONOMA INC (NYSE:WSM) stands out as a compelling pick for investors seeking long-term growth at a reasonable price. The company meets key criteria from Peter Lynch’s investment strategy, balancing solid growth, profitability, and financial health with an attractive valuation. Below, we break down why WSM fits this approach.

Key Strengths of WSM

• Strong Earnings Growth: WSM has delivered an impressive 5-year average EPS growth of 29.28%, well above the 15% minimum threshold in Lynch’s strategy. This signals sustained profitability.
• Reasonable Valuation: With a PEG ratio of 0.60 (below Lynch’s preferred threshold of 1), the stock is priced attractively relative to its growth.
• Exceptional Profitability: The company boasts a 50.47% Return on Equity (ROE), far exceeding the 15% benchmark, indicating efficient use of shareholder capital.
• Healthy Financials: WSM carries no debt (Debt/Equity of 0) and maintains a solid Current Ratio of 1.51, reflecting strong liquidity.

Fundamental Highlights

Our fundamental report assigns WSM a rating of 7 out of 10, with standout scores in profitability (9/10) and financial health (9/10). Key takeaways:

• Industry-Leading Margins: Operating margins of 17.95% and profit margins of 14.02% rank in the top 5% of peers.
• Sustainable Dividend: A 1.67% yield with a conservative payout ratio of 26.76% suggests room for future growth.
• Efficient Capital Use: ROIC of 30.57% confirms effective reinvestment of earnings.

For a deeper dive, review the full fundamental analysis here.

Our Peter Lynch Strategy screener lists more stocks matching these criteria and is updated daily.

Disclaimer

This is not investing advice. The observations here are based on data at the time of writing. Always conduct your own research before making investment decisions.