WSM - Williams-Sonoma: Valuation Stretched After Delivering Impressive Q1 Results

2024-06-14 05:42:38 ET

Summary

• WSM stock has risen over 50% this year, outperforming the S&P 500 and my own expectations.
• Williams-Sonoma had sales decline for several key brands yet delivered impressive operating margins in Q1 2024.
• The Company isn't seeing softness in consumer spending compared to other retailers, but I'm uncertain consumers can continue to afford high-ticket items.

At the end of 2023, I reviewed Williams-Sonoma ( WSM ) and thought the company seemed poised to continue to grow in 2024 and beyond. Since that time, WSM's stock has risen by over 50% , far surpassing the S&P 500 and my own expectations.

WSM had a great Q1, beating estimates and reaffirming sales guidance. Although, I think WSM is still a great long-term play, I'm downgrading the company to a "Hold" as I think the stock is getting more expensive and there is a risk consumer spending will decline....

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