Value
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.7 |
| P/S | 7.8 |
| EV/EBITDA | 1.3 |
| Fwd P/E | 5.4 |
| PEG | 3.5 |
| Analyst target | 3.0 |
- ▸Forward P/E: 23.6x
- ▸PEG: 3.30
WSM · Why this verdict
Why Williams-Sonoma (WSM) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Williams-Sonoma operates an elite-quality retail franchise with a return on equity of 54%, a perfect Piotroski score of 8/9, and four consecutive earnings beats — but the stock trades at a forward price-to-earnings ratio of 21.8x near its 52-week high with a highly concentrated e-commerce revenue stream that accounts for 65% of sales.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
With return on equity of 54% and return on assets described as excellent, Williams-Sonoma ranks as a best-in-class margin and returns business that compounders identify — supported by a Piotroski F-Score of 8 out of 9. Quality breakdown | Return on equity remains above 40% and operating margins expand or hold steady above current levels over the next 12 months. | →Stable |
| CounterExtremely high returns on equity in consumer retail often reflect substantial share buybacks rather than organic returns improvement, and can compress rapidly if consumer spending softens. | ||
The company has beaten earnings estimates in each of the last four quarters with an average surprise of 6.8%, most recently beating by 7.3% in May 2026. Earnings | The beat streak extends to at least 3 of the next 4 quarters with average surprise remaining above 4%. | ↑Improving |
| CounterThe most recent two quarterly surprises of 4.8% and 7.3% are narrowing, suggesting the consensus is catching up and beat magnitude may compress further. | ||
E-commerce sales represent 65% of total revenue, creating concentrated exposure to digital channel disruption, shipping cost inflation, and platform dependency risks. Bear case | E-commerce revenue as a share of total sales stays below 70% and the channel maintains gross margin above current levels over the next 12 months. | →Stable |
| CounterA 65% digital mix is a competitive strength that reduces real estate costs, enables direct customer data, and expands the addressable market beyond physical store reach. | ||
At a forward price-to-earnings ratio of 21.8x with a PEG ratio of 2.94 and the stock within 3.1% of its 52-week high, the stock is priced for perfection with virtually no margin of safety. Valuation breakdown | The stock pulls back to a level where forward price-to-earnings falls below 18x and the reward-to-risk ratio rises above 1.5, creating a more compelling entry. | →Stable |
| CounterPremium brands with demonstrated compounding power routinely sustain premium multiples, and analyst price targets may be too conservative for a business with 54% return on equity. | ||
With return on equity of 54% and return on assets described as excellent, Williams-Sonoma ranks as a best-in-class margin and returns business that compounders identify — supported by a Piotroski F-Score of 8 out of 9.
→StableQuality breakdown
- Expectation
- Return on equity remains above 40% and operating margins expand or hold steady above current levels over the next 12 months.
CounterExtremely high returns on equity in consumer retail often reflect substantial share buybacks rather than organic returns improvement, and can compress rapidly if consumer spending softens.
The company has beaten earnings estimates in each of the last four quarters with an average surprise of 6.8%, most recently beating by 7.3% in May 2026.
↑ImprovingEarnings
- Expectation
- The beat streak extends to at least 3 of the next 4 quarters with average surprise remaining above 4%.
CounterThe most recent two quarterly surprises of 4.8% and 7.3% are narrowing, suggesting the consensus is catching up and beat magnitude may compress further.
E-commerce sales represent 65% of total revenue, creating concentrated exposure to digital channel disruption, shipping cost inflation, and platform dependency risks.
→StableBear case
- Expectation
- E-commerce revenue as a share of total sales stays below 70% and the channel maintains gross margin above current levels over the next 12 months.
CounterA 65% digital mix is a competitive strength that reduces real estate costs, enables direct customer data, and expands the addressable market beyond physical store reach.
At a forward price-to-earnings ratio of 21.8x with a PEG ratio of 2.94 and the stock within 3.1% of its 52-week high, the stock is priced for perfection with virtually no margin of safety.
→StableValuation breakdown
- Expectation
- The stock pulls back to a level where forward price-to-earnings falls below 18x and the reward-to-risk ratio rises above 1.5, creating a more compelling entry.
CounterPremium brands with demonstrated compounding power routinely sustain premium multiples, and analyst price targets may be too conservative for a business with 54% return on equity.
Per-dimension breakdown
Quality
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 5.2 |
| Op margin | 6.5 |
| Net margin | 6.9 |
| Current ratio | 5.0 |
| FCF quality | 6.1 |
| Moat | 6.4 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 54%
- ▸Strong Piotroski F-Score: 8/9
Growth
3.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.6 |
| EPS growth | 2.9 |
Momentum
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.8 |
| Analyst rating | 7.5 |
| Price target | 3.6 |
- ▸LLM news sentiment: +0.55 (n=4)
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $11,357,977 (0.040% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.9 |
| quality rank | 8.6 |
| growth rank | 3.8 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.0 |
| support resistance | 3.3 |
| 52w position | 9.0 |
Risk (lower is worse)
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.6 |
| days to cover | 4.4 |
| volatility | 5.5 |
| put call | 9.7 |
| implied vol | 4.3 |
| max pain risk | 5.0 |
| beta | 5.1 |
| debt equity | 6.2 |
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.1 |
| dividend safety | 6.8 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 12 days
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +2 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+2Passed (5)
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:ANALYST:0.50
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.1<4.5
- ASYMMETRY:-1.7=NEGATIVE
Warning (1)
- EARNINGS_PROXIMITY:12d<=14d (soft)
Reward-to-Risk
-1.70
Upside
-18.3%
Downside
10.8%
Sizing output
AVOID
SetupRange Bound — RSI 58 mid-range, Bollinger mid-band
EdgeCatalyst-Driven — Earnings in 12d with 4/4 beat streak
SuitabilityAggressive — Beta 1.47>1.3
Investment implication
The F-path SELL output reflects an overall score of 5.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.1<4.5, ASYMMETRY:-1.7=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.70 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 7.2, Catalyst at 6.8, and Sentiment at 6.4; the weakest are Momentum at 3.1, Growth at 3.2, and Value at 4.2. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -1.70 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Elite Profitability Returns
Trip ifReturn on equity falls below 35%, declining more than 19 percentage points from the current 54% level.
- P2Consistent Earnings Beat Streak
Trip ifAverage earnings surprise falls below 0% in at least 2 of the next 4 reported quarters.
- P3Ecommerce Concentration Risk
Trip ifE-commerce revenue share rises above 72%, increasing concentration beyond 7 percentage points above current 65%.
- P4Valuation Near Analyst Target
Trip ifPrice drops below $209.09, reaching the stop-loss level and falling more than 6% below the current $223.29.