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Whole Foods Market (WFM)

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Whole Foods Market's (WFM) fourth-quarter 2011 earnings of $0.42 per share beat the Zacks Consensus Estimate by a penny, and rose 27.3% from the prior-year quarter on strong sales. The company is revamping its pricing strategy and concentrating more on value offerings while maintaining healthy margins.

Cost containment efforts, effective inventory management, and improved store-level performance are driving earnings growth. The company reiterated its fiscal 2012 outlook, and projected sales increase in a band of 13% to 15% and earnings growth in the range of 15% to 17%.

Moreover, a prudent capital investment is also translating into improved cash flows with a lower debt level and a healthy balance sheet. We maintain our long-term Outperform recommendation on the stock. Our target price of $76.00, 33.8X 2012 EPS, reflects this view.

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