Whole Foods hits new high

However, the natural foods market chain is still 3.6% below the Zacks consensus price target.

By Zacks.com May 9, 2013 1:35PM

 Groceries copyright Jeffrey Hamilton, Getty Images, Getty ImagesBy Zacks Equity Research

 

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


The company currently trades at a forward price-to-earnings ratio of 35.6 times, a 68.1% premium to the peer group average of 21.2 times. Additionally, its long-term estimated EPS growth rate is 17.9%, higher than the peer group average of 11.9%.


Whole Foods' second-quarter 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 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% to 7.5% rise in comparable-store sales and 6.5% to 7.2% growth in same-store sales.


Moreover, the company stated that for the first three weeks of the 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 No. 4 ("sell") as the comparable and same-store sales growth trend is softening. Consequently, Whole Foods narrowed the range of comparable and same-store sales growth for the fiscal year.


However, there are certain other stocks that warrant a look, such as Flowers Foods, Inc. (FLO), which holds a Zacks Rank No. 1 ("strong buy") and is expected to continue with its upbeat performance. Other stocks that should be watched are J&J Snack Foods Corp. (JJSF) and Hain Celestial Group, Inc. (HAIN), both of which sport a Zacks Rank No. 2 ("buy").


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