In a recent financial evaluation conducted on Friday, Williams-Sonoma, Inc. (NYSE:) was shown to be significantly undervalued according to a Discounted Cash Flow (DCF) model. The analysis revealed a fair value of $262 per share, a stark contrast to the current market price of $154. This discrepancy indicates that the company’s shares are undervalued by approximately 41%.
Interestingly, this valuation is significantly higher than the analyst’s target price of $146. It’s worth noting, however, that according to InvestingPro’s real-time metrics, the fair value is estimated at $181.19, which is still higher than the current market price, suggesting a potential investment opportunity.
The DCF model used in this analysis projects ten years of cash flows and is aligned with the Simply Wall St analysis model. This model assumes slowing growth rates for companies with growing free cash flow and includes a higher growth period. It is important to note that these projections are based on future cash flows, which can be influenced by numerous factors including market conditions and company performance.
In terms of company performance, InvestingPro data shows Williams-Sonoma has a market cap of $9970M and a P/E ratio of 10.65. The company also operates with a high return on assets at 21.7%, indicating efficient use of its resources. Over the past year, the company’s stock has seen a large price uptick of 29.59%, and it’s trading near its 52-week high, which is 97.59% of the high price.
InvestingPro Tips also provides some interesting insights about Williams-Sonoma. The management has been aggressively buying back shares and the company has raised its dividend for 18 consecutive years, which is a positive sign of its financial health. It’s also worth noting that 15 analysts have revised their earnings upwards for the upcoming period, indicating a positive outlook for the company.
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