Whole Foods Cooked

It seems far-fetched that the FTC would block the deal as anticompetitive while the company is admitting to being stung by competition (although that acknowledgement might not be an accident). So, I do believe this deal will go through. However, just because it gets completed doesn't mean it's a slam dunk. Whole Foods may be biting off more than it can chew.

Whole Foods is a great company. Management is top-notch, and personally, I love to shop there. But like so many hot retailers before it, there comes a time when the bar has been set so high that there's no way the company can continue to match its prior accomplishments, simply due to size.

Even including the after-hours selloff, the stock is trading at 29 times consensus estimates, which will certainly come down -- as will its expected growth rate. Until Wild Oats is integrated into the company and management has a clearer idea of what its contribution will be to the bottom line, I believe the stock should trade down to $35.

Whole Foods is still a good business and will continue to put food on the tables of its employees and millions of customers. But its days as a highflying growth stock are over.