DCF Studio

    WSM · NYQ · Consumer Cyclical

    Williams-Sonoma, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 74.00

    Market price

    USD 224.20

    Implied upside

    -67.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 74.00-67.0%
    Exit multiple
    USD 134.18-40.2%
    Market price
    USD 224.20

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 7.5bnUSD 7.3bnUSD 7.0bnUSD 6.8bnUSD 6.5bn-3.5%
    EBITUSD 1.3bnUSD 1.3bnUSD 1.2bnUSD 1.2bnUSD 1.1bn-3.5%
    NOPATUSD 1.0bnUSD 1.0bnUSD 971.4mUSD 937.9mUSD 905.5m-3.5%
    Add depreciation & amortisationUSD 215.1mUSD 207.7mUSD 200.5mUSD 193.6mUSD 186.9m-3.5%
    Less capital expenditureUSD -239.5mUSD -231.2mUSD -223.3mUSD -215.5mUSD -208.1m-3.5%
    Less increase in working capitalUSD 49.0mUSD 47.3mUSD 45.7mUSD 44.1mUSD 42.6m+3.5%
    Free cashflow to firmUSD 1.1bnUSD 1.0bnUSD 994.3mUSD 960.0mUSD 926.9m-3.5%
    Discount factor0.94550.84530.75570.67560.6040-
    Present valueUSD 1.0bnUSD 870.6mUSD 751.4mUSD 648.6mUSD 559.8m-13.7%
    Present Value Of The ForecastUSD 3.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.310Reported 1.463, pulled toward 1.0 (Blume)
    Cost of equity12.20%Risk-free + beta x equity risk premium
    Cost of debt7.00%Assumed: risk-free + 2bp (interest expense not reported)
    Market capitalisationUSD 26.4bn94.8% of capital
    Total debtUSD 1.5bn5.2% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC11.86%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 74.00

    60% of EV

    Forecast FCFF, final year
    USD 926.9m
    Capex at depreciation, working capital in reinvestment
    USD 905.5m
    Less reinvestment at g/ROIC (4.7% of NOPAT)
    USD -42.5m
    Capitalised
    USD 863.0m
    ROIC (reported)
    53.2%
    Terminal value, undiscounted
    USD 9.5bn
    Terminal value, discounted
    USD 5.7bn
    Enterprise value
    USD 9.6bn
    Less net debt
    USD 437.1m
    Equity value
    USD 9.1bn

    Exit at 16.3x EBITDA

    Value per shareUSD 134.18

    77% of EV

    Terminal value, undiscounted
    USD 21.7bn
    Terminal value, discounted
    USD 13.1bn
    Enterprise value
    USD 17.0bn
    Less net debt
    USD 437.1m
    Equity value
    USD 16.5bn

    Spread between methods: 58%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.86%85.7789.1092.8897.20102.19
    10.86%77.0179.5282.3285.4789.05
    11.86%69.9371.8674.0076.3779.02
    12.86%64.0965.6167.2769.1071.12
    13.86%59.1860.3961.7263.1564.73

    Outlined: this model. Green text: above today's price of 224.20. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-3.5%26.6%+30.1pp
    EBIT margin17.5%51.7%+34.2pp
    Discount rate11.9%5.4%-6.4pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.