What happened

Shares of Williams-Sonoma (WSM -1.14%) surged after the company delivered strong second-quarter earnings performance. The company's stock is up 11.7% in the week's trading as of 10:15 a.m. EDT today, according to data from S&P Global Market Intelligence.

WSM Chart

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The home furnishings and appliances company released its Q2 results on Aug. 25 and crushed top- and bottom-line expectations. The company posted adjusted earnings per share of $3.24 on revenue of $1.95 billion, while the average analyst estimate had targeted per-share earnings of $2.58 on sales of $1.8 billion. Even better, the big sales and earnings beats weren't the only treats that Williams-Sonoma had for investors. 

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Image source: Getty Images.

So what

Williams-Sonoma's revenue climbed 30.7% year over year in the second quarter, and comparable brand revenue rose 29.8%. Impressive sales growth and a significant margin expansion helped the company crush the market's earnings target, and adjusted earnings came in 80% higher than the prior-year quarter.

The company also paired the fantastic earnings release with a 20% dividend increase and the announcement of a new $1.25 billion stock buyback. The company will now pay a quarterly dividend of $0.71 per share, and the upcoming payout will be distributed on Nov. 26 to shareholders of record as of Oct. 22. The stock has a forward yield of roughly 1.5% based on the company's current share price.  

Now what

Williams-Sonoma's growth initiatives have been paying off faster than anticipated. The company raised its full-year sales growth percentage target to "high-teens to low 20s," up from its previous target for "low double-digit to mid-teen" growth. The business's adjusted operating margin for the year is projected to be between 16% and 17%. 

Management also expects that the company will reach its goal of hitting $10 billion in annual revenue by 2024 -- one year ahead of early estimates. The company sees a fragmented home furnishings market and a total addressable market of $780 billion that it's currently capturing about 1% of.

Williams-Sonoma has a market capitalization of roughly $14 billion and is valued at approximately 14 times this year's expected earnings.