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Analyst Blog

Buoyed by strong second-quarter fiscal 2013 earnings, shares of Whole Foods Market, Inc. recorded a new 52-week high of $103.72 yesterday, before closing at $102.19, and rising approximately 11.6% year to date. Based on the current price, Whole Foods is 3.6% below the Zacks Consensus average analyst price target of $106.

Moreover, it currently trades at a forward P/E of 35.6x, a 68.1% premium to the peer group average of 21.2x. Additionally, the company’s long-term estimated EPS growth rate is 17.9%, higher than the peer group average of 11.9%.

Whole Foods’ second-quarter fiscal 2013 earnings of 76 cents a share beat the Zacks Consensus Estimate of 73 cents, and surged 19% from 64 cents earned in the prior-year quarter as shoppers flocked to the grocery chain. The Austin, Texas-based company, which will undergo a two-for-one stock split later this month, also raised its earnings-per-share projection.

Management now envisions earnings between $2.86 and $2.89 per share, portraying a year-over-year jump of 13% – 15%, up from a range of $2.83 – $2.87 forecasted earlier.

Whole Foods continues to project an escalation of 10% – 11% in total sales for fiscal 2013 on the back of an expected 6.7% – 7.5% rise in comparable-store sales and 6.5% – 7.2% growth in identical-store sales.

Moreover, the company stated that for the first 3 weeks of the third quarter, comparable-store sales are witnessing healthy trends and are up 9.4%.

Zacks Rank for Whole Foods

Currently, Whole Foods carries a Zacks Rank #4 (Sell) as the comparable and identical store sales growth trend is softening. Consequently, Whole Foods narrowed the range of comparable and identical store sales growth for the fiscal year.

However, there are certain other stocks that warrant a look, such as Flowers Foods, Inc. , which holds a Zacks Rank #1 (Strong Buy) and is expected to continue with its upbeat performance. Other stocks that should be merited are J&J Snack Foods Corp. and The Hain Celestial Group, Inc. , both of which sport a Zacks Rank #2 (Buy).

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