Whole Foods Market Inc. Stock Buy Recommendation Reiterated (WFM)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Whole Foods Market (Nasdaq: WFM) has been reiterated by TheStreet Ratings as a buy with a ratings score of A- . The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • WHOLE FOODS MARKET INC has improved earnings per share by 26.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WHOLE FOODS MARKET INC increased its bottom line by earning $1.94 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($2.52 versus $1.94).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Food & Staples Retailing industry average. The net income increased by 32.1% when compared to the same quarter one year prior, rising from $88.47 million to $116.85 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.7%. Since the same quarter one year prior, revenues rose by 13.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • WFM's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.41, which illustrates the ability to avoid short-term cash problems.
  • 38.60% is the gross profit margin for WHOLE FOODS MARKET INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 4.30% is above that of the industry average.

Whole Foods Market, Inc. engages in the ownership and operation of natural and organic food supermarkets. The company offers produce, seafood, grocery, meat and poultry, bakery, prepared foods and catering, coffee and tea, nutritional supplements, and vitamins. The company has a P/E ratio of 41, above the average retail industry P/E ratio of 40 and above the S&P 500 P/E ratio of 17.7. Whole Foods Market has a market cap of $17.31 billion and is part of the services sector and retail industry. Shares are up 37.6% year to date as of the close of trading on Friday.

You can view the full Whole Foods Market Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.
null

If you liked this article you might like

Target Is Taking on the Big Guys

This Walmart Concept Just Saw the Most New Visitors in Over 3 Years

Boeing Flies Dow to Another Record Close, S&P 500 and Nasdaq Miss Out

Cramer: Market Rushes to Refill Its Glass

Why Amazon Is Building a Second Headquarters Worth $5.5 Billion