What’s Happening With Williams-Sonoma’s Stock?

Williams-Sonoma’s stock (NYSE: WSM), a furniture retailer, experienced almost a 7% gain over the last week (five trading days) to levels of around $172 currently, on the back of a solid fourth-quarter report. The retailer saw a comparable brand revenue growth of nearly 26% year-over-year, including e-commerce comp growth of around 48% in Q4. But will the company’s stock see higher levels over the coming weeks, or is a decline in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price, returns for WSM stock average around 3.9% in the next one-month (twenty-one trading days) period after experiencing a 6.6% rise in a week.

But how would these numbers change if you are interested in holding WSM stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test WSM stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF WSM stock moved by -5% over five trading days, THEN over the next twenty-one trading days, WSM stock moves an average of 4.1%, which implies an excess return of 2.8% compared to the S&P500.

More importantly, there is a 63% probability of a positive return over the next twenty-one trading days and a 58% probability of a positive excess return after a -5% change over five trading days.

Some Fun Scenarios, FAQs & Making Sense of Williams-Sonoma
WSM
Stock Movements:

Question 1: Is the average return for Williams-Sonoma stock higher after a drop?

Answer: Consider two situations,

Case 1: Williams-Sonoma stock drops by -5% or more in a week

Case 2: Williams-Sonoma stock rises by 5% or more in a week

Is the average return for Williams-Sonoma stock higher over the subsequent month after Case 1 or Case 2?

WSM stock fares better after Case 1, with an average return of 4.1% over the next month (twenty-one trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.5% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next twenty-one trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how WSM stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold Williams-Sonoma stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For WSM stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for Williams-Sonoma after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although WSM stock appears to be an exception to this general observation.

WSM’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Williams-Sonoma stock by changing the inputs in the charts above.

While WSM stock may move higher in the near term, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how the stock valuation for Caseys General Stores vs. PQ Group Holdings shows a disconnect with their relative operational growth. You can find many such discontinuous pairs here.

See all Trefis Price Estimates and Download Trefis Data here

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