Should You Buy Williams-Sonoma Stock?

We believe there are a few things to fear in WSM stock given its overall Moderate operating performance and financial condition. This is aligned with the stock’s Moderate valuation because of which we think it is Fairly Priced. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $23 Bil in market cap, Williams-Sonoma offers omni-channel retail of cookware, dining, furniture, home decor, and kids accessories through specialty brands focused on cooking, entertaining, and home products.

[1] Valuation Looks Moderate

This table highlights how WSM is valued vs broader market. For more details see: WSM Valuation Ratios

[2] Growth Is Inconsistent

• Williams-Sonoma has seen its top line shrink at an average rate of -2.9% over the last 3 years
• Its revenues have grown 3.3% from $7.6 Bil to $7.8 Bil in the last 12 months
• Also, its quarterly revenues grew 2.7% to $1.8 Bil in the most recent quarter from $1.8 Bil a year ago.

This table highlights how WSM is growing vs broader market. For more details see: WSM Revenue Comparison

[3] Profitability Appears Moderate

• WSM last 12 month operating income was $1.4 Bil representing operating margin of 18.3%
• With cash flow margin of 16.5%, it generated nearly $1.3 Bil in operating cash flow over this period
• For the same period, WSM generated nearly $1.1 Bil in net income, suggesting net margin of about 14.2%

This table highlights how WSM profitability vs broader market. For more details see: WSM Operating Income Comparison

[4] Financial Stability Looks Very Strong

• WSM Debt was $1.4 Bil at the end of the most recent quarter, while its current Market Cap is $23 Bil. This implies Debt-to-Equity Ratio of 6.0%
• WSM Cash (including cash equivalents) makes up $986 Mil of $5.2 Bil in total Assets. This yields a Cash-to-Assets Ratio of 18.9%

[4] Downturn Resilience Is Weak

WSM has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• WSM stock fell 52.4% from a high of $110.81 on 16 November 2021 to $52.73 on 24 May 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 12 February 2024
• Since then, the stock increased to a high of $217.71 on 18 February 2025 , and currently trades at $191.98

 
2020 Covid Pandemic

• WSM stock fell 60.0% from a high of $38.30 on 17 January 2020 to $15.33 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 29 May 2020

 
2008 Global Financial Crisis

• WSM stock fell 87.1% from a high of $18.26 on 5 April 2007 to $2.36 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 9 February 2011

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read WSM Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.