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Whole Foods Market, Inc. (WFM - Analyst Report) is focusing on cost-control measures, effective inventory management and store-level performance. It is also revamping its pricing strategy and concentrating on value offerings. Needless to say, this leading natural and organic foods supermarket is well poised to surge once the economy revives and demand for healthier and natural food improves.

However, increasing competition and aggressive pricing is weighing on the company’s performance as more and more companies are entering as well as expanding their presence in the Organic & Natural food business, such as The Kroger Co. (KR - Analyst Report).

Looking at the numbers, the second-quarter fiscal 2014 earnings came in at 38 cents a share, falling short of the Zacks Consensus Estimate of 41 cents and remaining flat with the prior-year quarter. Whole Foods sustained its top-line growth momentum with revenue climbing 10% to $3,322 million, but coming in below Zacks expectation of $3,346 million.

Consequently, the company took a conservative stance on the sales and earnings outlook after posting lower-than-expected results. Whole Foods has lowered its guidance for the third time. Management now projects an escalation of 10.5% to 11% in total sales for fiscal 2014 on the back of an expected 5% to 5.5% rise in comparable-store sales. Earlier, management had forecasted 11% to 12% sales growth buoyed by a 5.5% to 6.2% rise in comparable-store sales.

Management now envisions earnings in the band of $1.52 to $1.56 per share, portraying a year-over-year jump of 3% to 6%, down from a range of $1.58 to $1.65 projected earlier.

However, we still remain somewhat constructive on the stock, given the company’s strategic roadmap through fiscal 2018 that looks quite convincing. Management hinted at attaining $25 billion in sales in the next 5 years. The company targets earnings per share growth of either equal to or more than that of sales from the commencement of fiscal 2015, and gross margin in the range of 34% to 35%.

Given the pros and cons embedded in the stock, Whole Foods currently carries Zacks Rank #3 (Hold).

Other Stocks Worth Considering

Better-ranked stocks include The Hain Celestial Group, Inc. (HAIN - Analyst Report) and Treehouse Foods, Inc. (THS - Snapshot Report). Both stocks sport a Zacks Rank #1 (Strong Buy).

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