Whole Foods Hits 52-Week-High on Better-Than-Expected Earnings

NEW YORK ( TheStreet) -- Shares of Whole Foods Market ( WFM) hit a new 52-week-high on Wednesday following better-than-expected second-quarter earnings and a two-for-one stock split announced the night before.

At last check, Whole Foods shares were up 10.1% to $102.24. Shares last hit a 52-week-high of $101.86 on Oct. 5, 2012. Trading volume on Wednesday -- less than an hour after the markets opened -- had already surpassed the stock's average three-month trading volume of 2.4 million shares.

The Austin, Texas-based company said after the markets closed on Tuesday that for its fiscal second quarter, which ended on April 14, 2013, sales rose 13.3% to $3.03 billion, meeting analysts' expectations. Whole Foods' comparable store sales rose 6.9%, it said.

The supermarket reported to the upside with regards to its bottom line. Whole Foods reported quarterly net income of $142 million, or 76 cents per diluted share. Earnings per share rose 19% as compared to the prior year's quarter.

Analysts on average, according to Thomson Reuters, were expecting the specialty supermarket retailer to post earnings per share of 73 cents.

Analysts reaffirmed their optimism regarding Whole Foods.

"Because of the slower start to the period, a spate of softer retail sales reports, and investor misperceptions regarding management's motivation to step up price/value efforts, the in-line comp-store sales result will be viewed as an important positive," William Blair analyst Mark Miller wrote in a note. "Slightly better gross margin also builds confidence that management can execute in an investor-friendly way in its ambition to capture a much bigger share of a huge industry."

Of the 29 sell-side analysts that cover the company, the majority -- 15 -- have "buy" ratings on the stock. Only two have "sell" ratings, according to Bloomberg. Miller has an "outperform" rating on the stock.

"We believe Whole Foods can meet or exceed the high end of the fiscal 2013 EPS guidance range (which was raised), and we believe valuation can expand with a growing pipeline of new stores and rising return on capital," Miller wrote.

Whole Foods narrowed its guidance for comparable and identical store sales growth ranges for the fiscal year, and raised full-year EPS guidance to a range to $2.86 to $2.89. The company now expects full-year sales growth between 12% and 14% and diluted earnings per share growth between 15% and 17%.

Cantor Fitzgerald analyst Ajay Jain We reiterated his "buy" rating and said he expects further positive adjustments to earnings guidance by management over the next two quarters.

"We still view the updated earnings guidance as deliberately conservative," Jain wrote in a note.

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

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