Earnings Preview: Whole Foods Market

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 |  About: Whole Foods Market, Inc. (WFM)
by: Vytautas Drumelis

Whole Foods Market, Inc. (NASDAQ:WFM) is scheduled to report its Q3 2012 results on July 25, 2012, after the bell. The street expects EPS and revenue of $0.61 and $2.73B, respectively.

In this article I will recap the historical results of the company, its latest EPS estimates vs. surprises, the latest news from WFM and the news from its closest competitors.

Whole Foods Market, Inc. Revenue and Net Income History

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last four quarters. In the last quarter it reported $0.64 EPS, beating analyst estimates of $0.59.

Whole Foods Market, Inc. EPS Historical Results vs Estimates

The consensus EPS estimate is $0.61 based on 25 analysts' estimates, up from $0.50 a year ago. Revenue estimates are $2.73B, up from $2.40B a year ago. The median target price by analysts for the stock is $100.00.

Average recommendation: Overweight

Source: Marketwatch

Analyst Upgrades and Downgrades

  • On June 19, 2012, Cantor Fitzgerald initiated Buy rating for the company.
  • On May 3, 2012, UBS reiterated Buy rating for the company.
  • On May 3, 2012, Barclays reiterated Equal Weight rating for the company.
  • On February 1, 2012, RBC Capital Mkts reiterated Outperform rating for the company.

Latest News

  • On June 13, 2012, Whole Foods Market, Inc. announced that for fiscal 2012, it expects sales growth of about 13%, EBITDA of over $1 billion and earnings per share (NYSEARCA:EPS) growth of 23% to 25%. The Company reported EPS of $1.93 in fiscal 2011.
  • On May 2, 2012, Whole Foods Market, Inc. announced that for fiscal 2012, it expects revenue growth to be in the range of 14.8%-15.6%, compared to previous range of 13.5-15.0%, EBITDA in the range of $1.03-$1,04 billion, compared to previous range of $980-$995 million and diluted earnings per share in the range of $2.44 - $2.47, compared to previous range of $2.28-$2.32. The Company reported revenue of $10.107 billion in fiscal 2011.
  • On February 8, 2012, Whole Foods Market, Inc. announced that for fiscal 2012, it expects revenue growth to be in the range of 13.5%-15.0%, compared to previous range of 13%.0-15.0%, EBITDA in the range of $980-$995 million, compared to previous range of $980-$995 million and diluted earnings per share in the range of $2.28-$2.32, compared to previous range of $2.21-$2.26. The Company reported revenue of $10.107 billion in fiscal 2011.

Competitors

Hormel Foods (NYSE:HRL), Kroger (NYSE:KR), SUPERVALU (NYSE:SVU), and Safeway (NYSE:SWY) are considered major competitors for Whole Foods Market and the table below provides the key metrics for these companies and the industry.

Whole Foods Market, Inc. key ratio comparison with direct competitors

The chart below compares the stock price changes as a percentage for the selected companies and S&P 500 index for the last one year period.

click to enlarge image

WFM ChartClick to enlarge

WFM data by YCharts

Competitors' Latest Development

  • On July 11, 2012, SUPERVALU, Inc. announced that it expects business transformation to meet the customers' demands at lower prices and the Company intend to do this while remaining profitable, continuing to pay down debt and investing the capital to maintain and enhance the Company's stores and related assets.
  • On July 11, 2012, SUPERVALU, Inc. announced that in conjunction with its financial advisors, Goldman Sachs and Greenhill & Co., have initiated a review of strategic alternatives to create value for the Company's shareholders.
  • On July 6, 2012, Reuters reported that Five big U.S. retailers filed an antitrust lawsuit against Pfizer Inc and India's Ranbaxy Laboratories Ltd, accusing them of conspiring to delay sales of generic versions of Lipitor.
  • On June 21, 2012, Kroger Co announced that it has declared a quarterly dividend of $0.115 per share to be paid on September 1, 2012, to shareholders of record as of the close of business on August 15, 2012.
  • On June 20, 2012, Kroger Co announced that for second quarter of 2012, it expects earnings per share growth to be in line with long-term growth trend of 6% to 8% and the third and fourth quarters will be higher than that.
  • On June 14, 2012, Kroger Co announced that the Board of Directors has approved a $1 billion share repurchase program that replaces the prior authorization, which was exhausted on June 12, 2012.
  • On June 6, 2012, ALBERTSONS Southern California Division, a subsidiary of SUPERVALU, Inc. announced plans to reduce its store-level workforce by an estimated 2,200-2,500 positions.
  • On May 23, 2012, Safeway, Inc. announced that the Company's fiscal 2012 guidance is for earnings per share between $1.90 and $2.10. According to I/B/E/S Estimates, analysts are expecting the Company to report EPS of $2.00 for fiscal 2012.
  • On May 16, 2012, Kroger Company announced that for fiscal 2012, the Company continues to anticipate identical supermarket sales growth, excluding fuel, of 3% to 3.5%. Fiscal 2012 net earnings are expected to range from $2.28 to $2.38 per diluted share.
  • On May 15, 2012, Safeway, Inc. announced that its Board of Directors declared a regular quarterly cash dividend, reflecting a 21% increase from $0.145 per share to $0.175 per share on a quarterly basis.
  • On April 26, 2012, Safeway, Inc. announced that for fiscal 2012, it expects to remains at $1.90-$2.10 per diluted share . According to I/B/E/S Estimates, analysts are expecting the Company to report EPS of $1.96 for fiscal 2012.
  • On April 10, 2012, SUPERVALU, Inc. announced that for fiscal 2013, it expects net sales to be in the range of $35.0-$35.5 billion, GAAP diluted net earnings (loss) per share in the range of $1.27-$1.42 and Non-GAAP adjusted diluted net earnings per share in the range of $1.27-$1.42. Identical store sales growth, excluding fuel, is projected to be negative 1.0% to negative 2.0%. According to I/B/E/S Estimates, analysts on an average were expecting the Company to report revenue of $35.2 billion and EPS of $1.19 for fiscal 2013.
  • On April 9, 2012, Safeway, Inc. announced that it has named Robert Edwards President of the Company. Mr. Edwards has served as Safeway's Executive Vice President and Chief Financial Officer since 2004.
  • On March 20, 2012, Safeway, Inc. announced that it is joining forces with the U.S. Department of Agriculture's (USDA) Center for Nutrition Policy and Promotion (CNPP), to improve the health and well-being of Americans.
  • On March 19, 2012, Safeway, Inc. announced that its Board of Directors on March 16, 2012 and declared a regular quarterly cash dividend of $0.145 per share. The cash dividend will be payable on April 12, 2012 to stockholders of record at the close of business on March 22, 2012.
  • On March 6, 2012, Safeway, Inc. announced that for fiscal 2012, it expects earnings per share of $1.90 to $2.10 per diluted share. This guidance contemplates Identical Store (NYSE:ID) sales growth, excluding fuel, in a range of 1.0% to 2.0% in fiscal 2012.
  • On March 1, 2012, Kroger Company announced that for fiscal 2012, it expects identical supermarket sales growth, excluding fuel, of approximately 3.0% to 3.5%. The Company expects fiscal 2012 earnings per share to a range from $2.28 to $2.38 per diluted share.
  • On February 23, 2012, Hormel Foods Corporation announced that it has maintained fiscal 2012 earnings guidance range of $1.79 to $1.89 per share. According to I/B/E/S Estimates, analysts on an average were expecting the Company to report EPS of $1.81 for fiscal 2012.
  • On February 22, 2012, Save-A-Lot, a wholly owned subsidiary of SUPERVALU Inc., announced that it is opening three new stores in New York in February, bringing the total number of Save-A-Lot stores in the state to 52. The locations of the new stores and the dates they are scheduled to open are as follows: 2327 Seminary St., Auburn (opened February 7, 2012); 3 Geddes St., Holley (opened February 15, 2012); and 6000 Park Ave., Hamburg (scheduled to open February 25, 2012).
  • On February 13, 2012, Weis Markets announced that it has entered into an agreement to purchase three Genuardi's locations from Safeway Inc. The stores are located at: 200 Ridge Pike in Conshohocken, 13 Old Dublin Pike in Doylestown and 25 West Germantown Pike in Norristown.
  • On February 7, 2012, Dow Jones reported that SUPERVALU, Inc. plans to eliminate about 800 corporate and regional office jobs by February 25 as the supermarket operator continues its efforts to reduce overall operating costs.

Technical Overview


The stock has a market capitalization of $15.42B and is currently trading at $84.03 with a 52 week range of $53.32 - $97.25. The stock's year-to-date performance has been 21.38%. It is currently trading above 200 SMA, but below 20 and 50 SMA.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.