Austin-based Whole Foods will use the notes to pay for stock repurchases and debt, the company said on Monday afternoon.
Moody's assigned a "Baa3" rating to the notes, which is a "medium grade" rating with a stable outlook, the rating service said in a statement on Tuesday.
"We expect the proliferation of organic and natural foods across the conventional and alternative food retail space to continue," Moody's said. "This increased competitive environment may pressure Whole Foods' top line growth and margins as consumers have a wider array of choices at potentially lower price points. However, Whole Foods has a strong niche position with a loyal customer base."
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, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 12.0%. Since the same quarter one year prior, revenues slightly increased by 5.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 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. Despite the fact that WFM's debt-to-equity ratio is low, the quick ratio, which is currently 0.59, displays a potential problem in covering short-term cash needs.
- 37.64% is the gross profit margin for WHOLE FOODS MARKET INC which we consider to be strong. Regardless of WFM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.65% trails the industry average.
- Net operating cash flow has decreased to $132.00 million or 42.35% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 38.07%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 54.28% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, WFM is still more expensive than most of the other companies in its industry.
- You can view the full analysis from the report here: WFM
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.