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What Could Drive Williams-Sonoma’s EPS This Year

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Analysts’ expectations

This year, Williams-Sonoma (WSM) expects adjusted EPS of $4.50-$4.70, while analysts expect the company’s adjusted EPS to rise 2.9% YoY (year-over-year) to $4.59 from $4.46. Its EPS growth is expected to be driven by revenue growth and share repurchases, partially offset by its EBIT margin contracting and a higher effective tax rate.

This year, analysts expect Williams-Sonoma’s EBIT margin to contract YoY to 8.4% from 8.5%, and its effective tax rate to rise YoY from 22.3% to 23.6%. The company’s management expects an effective tax rate of 23%–24%.

On March 20, WSM announced that its board had authorized increasing its existing share repurchase amount by $500 million. By the end of the fourth quarter, the company had $710 million under its share repurchase program. Share repurchases drive a company’s EPS by lowering the number of shares outstanding. This year, analysts expect RH’s (RH) EPS to grow 20.1%, and Bed Bath & Beyond’s (BBBY) to fall 10.4%.

Dividends

On March 20, WSM’s board announced a quarterly dividend of $0.48 per share to be paid on May 31 to shareholders as of April 26. The company’s dividend yield was at 3.36% yesterday, and its stock price was $57.18. Bed Bath & Beyond’s dividend yield was 3.73%.

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