In today’s content analysis, we discuss about Williams-Sonoma (WSM), a multichannel retailer specialized in high-end products for the home. 
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After trading at high premiums during almost five years, WSM’s stock fell under its intrinsic value at the end of 2016. The return on capital has always been very stable, around 15%, and the NOPAT is still growing along with the invested capital.
As for valuation, today’s P/IV ratio of 0.86 indicates a potential price appreciation of around 17% and is at its most attracting level in 5 years. The Future Growth Value (FGV) premium of 9% is very acceptable when considering the Current Operating Value (COV) growth over the last 5 years. The COV has been growing at an average pace of 16.5% per year, a higher number than the expected growth rate imbedded in the current FGV premium.
The EVA has also been growing at a very stable and linear pace since January 2013, demonstrating the management’s capacity in allocating intelligently its capital to increase the wealth generated for its shareholders.
The accounting performance is also solid. The revenues keep increasing, although at a lower rate than before. The free cash flows are and have always been high and positive, which allows the management to continually increase the dividends, buyback shares (around 2.7% of shares outstanding per year) and invest in its capital, all this without issuing debt.
