Here's Why Williams-Sonoma (WSM) Gained But Lagged the Market Today

FGI Industries Ltd. (FGI) came out with a quarterly loss of $0.01 per share versus the Zacks Consensus Estimate of a loss of $0.03. This compares to earnings of $0.05 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 66.67%. A quarter ago, it was expected that this company would post earnings of $0.03 per share when it actually produced earnings of $0.01, delivering a surprise of -66.67%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

FGI Industries, which belongs to the Zacks Retail - Home Furnishings industry, posted revenues of $36.1 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 17.21%. This compares to year-ago revenues of $29.93 million. The company has topped consensus revenue estimates two times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

FGI Industries shares have lost about 40.9% since the beginning of the year versus the S&P 500's gain of 25.7%.

What's Next for FGI Industries?

While FGI Industries has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for FGI Industries: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.05 on $31.6 million in revenues for the coming quarter and -$0.01 on $122.5 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Home Furnishings is currently in the bottom 13% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Williams-Sonoma (WSM), has yet to report results for the quarter ended October 2024.

This seller of cookware and home furnishings is expected to post quarterly earnings of $1.76 per share in its upcoming report, which represents a year-over-year change of -3.8%. The consensus EPS estimate for the quarter has been revised 0.1% lower over the last 30 days to the current level.

Williams-Sonoma's revenues are expected to be $1.78 billion, down 4.2% from the year-ago quarter.

Zacks Investment Research

Williams-Sonoma (WSM) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.

Over the past month, shares of this seller of cookware and home furnishings have returned -10.5%, compared to the Zacks S&P 500 composite's +3.2% change. During this period, the Zacks Retail - Home Furnishings industry, which Williams-Sonoma falls in, has lost 9.1%. The key question now is: What could be the stock's future direction?

Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Earnings Estimate Revisions

Here at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.

Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

Williams-Sonoma is expected to post earnings of $1.76 per share for the current quarter, representing a year-over-year change of -3.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.

For the current fiscal year, the consensus earnings estimate of $7.99 points to a change of +7.5% from the prior year. Over the last 30 days, this estimate has remained unchanged.

For the next fiscal year, the consensus earnings estimate of $8.18 indicates a change of +2.4% from what Williams-Sonoma is expected to report a year ago. Over the past month, the estimate has changed -0.6%.

With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Williams-Sonoma.

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Projected Revenue Growth

While earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.

For Williams-Sonoma, the consensus sales estimate for the current quarter of $1.78 billion indicates a year-over-year change of -4.2%. For the current and next fiscal years, $7.53 billion and $7.65 billion estimates indicate -2.8% and +1.5% changes, respectively.

Last Reported Results and Surprise History

Williams-Sonoma reported revenues of $1.79 billion in the last reported quarter, representing a year-over-year change of -4%. EPS of $1.74 for the same period compares with $1.56 a year ago.

Compared to the Zacks Consensus Estimate of $1.82 billion, the reported revenues represent a surprise of -1.48%. The EPS surprise was +6.1%.

The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates two times over this period.

Valuation

No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Williams-Sonoma is graded B on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom Line

The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Williams-Sonoma. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

Zacks Investment Research

Fortune Brands Innovations (FBIN) came out with quarterly earnings of $1.16 per share, beating the Zacks Consensus Estimate of $1.15 per share. This compares to earnings of $1.19 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 0.87%. A quarter ago, it was expected that this maker of products for the home, like faucets, cabinets, windows and doors would post earnings of $1.12 per share when it actually produced earnings of $1.16, delivering a surprise of 3.57%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Fortune Brands Innovations, which belongs to the Zacks Retail - Home Furnishings industry, posted revenues of $1.16 billion for the quarter ended September 2024, missing the Zacks Consensus Estimate by 6.97%. This compares to year-ago revenues of $1.26 billion. The company has topped consensus revenue estimates just once over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Fortune Brands Innovations shares have added about 12.4% since the beginning of the year versus the S&P 500's gain of 21.2%.

What's Next for Fortune Brands Innovations?

While Fortune Brands Innovations has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Fortune Brands Innovations: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $1.15 on $1.19 billion in revenues for the coming quarter and $4.29 on $4.78 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Home Furnishings is currently in the bottom 12% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Williams-Sonoma (WSM), another stock in the same industry, has yet to report results for the quarter ended October 2024.

This seller of cookware and home furnishings is expected to post quarterly earnings of $1.76 per share in its upcoming report, which represents a year-over-year change of -3.8%. The consensus EPS estimate for the quarter has been revised 0.1% lower over the last 30 days to the current level.

Williams-Sonoma's revenues are expected to be $1.78 billion, down 4.2% from the year-ago quarter.

Zacks Investment Research