Jim Cramer Breaks Down Whole Foods Market's (WFM) Plunge and Disney's (DIS) Success

NEW YORK (TheStreet) -- TheStreet's Jim Cramer notes Whole Foods Market  (WFM), which plunged today in the wake of its quarterly, said it needs to spend much more, believes it will win its category and will continue to put up stores.

Some analysts felt Whole Foods was oblivious to what this would do to the stock, but Cramer believes management is thinking about what it would do for the company. He calls it "a courageous decision" to keep spending money and keep building stores in the face of competition in the space. 

"That's what Whole Foods does," Cramer says. "They just don't let up."

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Cramer says Disney  (DIS) is a different story entirely, as it has become a story of "franchise after franchise after franchise." Captain AmericaFrozen and the upcoming Star Wars movie are all major names, and Disney's theme parks are also performing well. He says Disney is "all systems go" with the possible exception of a little bit of ESPN pricing.

Cramer adds the market could come down and Disney would be a "go-to name," but it is unclear where Whole Foods would settle.


Separately, TheStreet Ratings team rates WHOLE FOODS MARKET INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate WHOLE FOODS MARKET INC (WFM) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, growth in earnings per share, increase in net income 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 analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 9.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 1.17, which illustrates the ability to avoid short-term cash problems.
  • WHOLE FOODS MARKET INC has improved earnings per share by 7.7% 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 $1.47 versus $1.26 in the prior year. This year, the market expects an improvement in earnings ($1.62 versus $1.47).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Food & Staples Retailing industry average, but is less than that of the S&P 500. The net income increased by 8.2% when compared to the same quarter one year prior, going from $146.00 million to $158.00 million.
  • 37.65% 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 3.72% is above that of the industry average.
  • You can view the full analysis from the report here: WFM Ratings Report

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