Is Williams-Sonoma Inc (WSM) overvalued?
On Equity Rank's model estimate, WSM trades 94% above its fair value. Williams-Sonoma Inc (WSM) last closed at $254.06; the multi-method model fair value is $130.71.
| Price | Model fair value | Price vs model |
|---|---|---|
| $254.06 | $130.71 | 94% above |
What the answer rests on
- 1 of 11 valuation methods put WSM's value above its price and 10 put it below, so the methods mostly agree.
- To justify today's price, WSM's free cash flow would need to grow about 16.5% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 14.7% a year.
- WSM trades at 27.7 times its last year's earnings, against a median of 14.7 for 36 profitable Specialty Retail companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 38% above to 137% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind WSM's fair value · What prices assume · Other companies