We recently published a list of the 10 Best Furniture Stocks to Buy Right Now. In this article, we are going to take a look at where Williams-Sonoma, Inc. (NYSE:WSM) stands against other best furniture stocks to buy right now.
Overview of the Global Furniture Market
According to a report by Mordor Intelligence, the global furniture market has a market size of $670.97 billion as of 2025. It is expected to grow at a compound annual growth rate (CAGR) of 5.25% in the next five years, reaching around $866.59 billion by 2030. While the largest furniture market is North America, the Asia Pacific is the fastest growing.
The furniture industry has grown steadily recently, primarily due to urbanization, an increase in disposable incomes, population expansion, development in the commercial construction industry, and an evolution in lifestyle preferences across the globe. With urbanization on the rise, the furniture industry is expected to continue growing. This holds especially true in emerging markets, where the demand for commercial and residential furniture is expected to increase steadily. The growth of the housing industry is a prominent factor propelling this rise. Continued expansion in the real estate space and a growing preference for interior decoration and home renovation are prominent factors behind the growing demand for furniture items.
According to Grand View Research, the commercial segment in the furniture industry is anticipated to grow the fastest at a compound annual growth rate of 6.2% between 2023 and 2030. Increasing demand for hotels and offices is expected to support this growth. The residential segment, on the other hand, had the largest revenue share in the industry, of more than 60% in 2022. It is anticipated to grow at a compound annual growth rate of 5.7% between 2023 and 2030, primarily due to the increase in real estate construction projects, especially in urban areas, and the proliferating demand for residential furniture.
Housing Industry: Will Headwinds Persist in 2025?
On January 22, Laura Alber, CEO of Williams-Sonoma, appeared on CNBC’s “Squawk Box.” She was of the view that product innovation is one of the most significant growth drivers in the home furnishings industry. Pitting the home furnishing business against apparel, she said the great thing about the home furnishing industry is that the cycles are longer. For instance, if consumer sentiment favors a particular innovative model of coffee tables, the same can be applied to larger dining tables and other furniture items to drive demand and benefit from a longer lifecycle before it eventually starts to go downhill. Therefore, the seasons in the home furnishings industry span years in comparison to the much shorter seasons in retail.
However, Ivy Zelman, Zelman & Associates executive vice president, believed that challenges may persist in the housing industry in 2025. She appeared on CNBC on December 24 to discuss the state of the housing market and its potential outlook in 2025, and was of the opinion that 2025 would see more challenges in the market as there has been no relief so far on the stretched affordability issue of the consumer. Conditions seem to be worsening as mortgage rates continue to be elevated and are going even higher. With headwinds such as tariffs and a possibility of inflation in the current administration, there continues to be a lid on performance in the sector.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 25 furniture stocks. We then selected the top 10 most popular stocks among elite hedge funds as of Q3 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An interior of a modern home with a wide selection of cookware, tools and cutlery on display.
Williams-Sonoma, Inc. (NYSE:WSM)
Number of Hedge Fund Holders: 35
Williams-Sonoma, Inc. (NYSE:WSM) is a retailer of home products. It operates through popular segments, including Pottery Barn, Williams Sonoma, Pottery Barn Kids, West Elm, and more. It also operates an Other segment that covers the operations of its international franchise segments, Rejuvenation and Mark and Graham.
Although the company’s revenue in fiscal Q3 2024 was down due to the broader market’s headwinds, Williams-Sonoma, Inc. (NYSE:WSM) managed to grow its earnings per share by 7.1% in the quarter, taking it to $1.96 and exceeding analyst expectations. This growth was attributed to the company’s higher gross margins, which increased to 46.7% from 44.4% last year. The company also repurchased $533 million worth of stock in fiscal Q3 2024, bringing its share count and expanding its year-to-date repurchase total to $707 million.
The company also demonstrated strong cash generation. In Q3 2024, it reported an operating cash flow of $254 million and returned $73 million to shareholders via dividends. In addition, it has been growing its payouts for 15 consecutive years. Williams-Sonoma, Inc.’s (NYSE:WSM) operating results reflect its operational improvements and the strength of its margin profile, making it one of the best furniture stocks to buy right now.
Overall, WSM ranks first on our list of best furniture stocks to buy right now. While we acknowledge the potential of WSM, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
Hedge Fund Resource Center