The Austin-based grocer faces headwinds such as continued deflation and negative media attention, Jefferies said.
Jefferies analysts projected Whole Foods' 2015 fourth quarter earnings at 35 cents per share. Whole Foods will report its fourth quarter earnings results on Nov. 4 after the market close.
"We expect little progress on comps and see potential for management to get more aggressive on reducing price/gross margins," Jefferies said.
Shares of Whole Foods were down by 0.40% to $30.03 in mid-afternoon trading on Friday.
Separately, TheStreet Ratings team rates WHOLE FOODS MARKET INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate WHOLE FOODS MARKET INC (WFM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 7.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food & Staples Retailing industry average. The net income increased by 1.3% when compared to the same quarter one year prior, going from $151.00 million to $153.00 million.
- WFM's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.82 is somewhat weak and could be cause for future problems.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Food & Staples Retailing industry and the overall market on the basis of return on equity, WHOLE FOODS MARKET INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- WFM has underperformed the S&P 500 Index, declining 13.63% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full analysis from the report here: WFM