Story updated at 9:50 a.m. to reflect market activity.
Shares of Whole Foods fell 0.4% to $39.00 in morning trading.
The firm lowered its EPS estimates for the grocery store operator for 2015. Sterne Agee analysts now estimate Whole Foods will report earnings of 32 cents for the fourth quarter of 2014, and $1.54 a share for full year 2014. For full-year 2015 the analyst firm expects earnings of $1.65 a share, down from previous estimates of $1.76 a share for the year.
Analyst Charles Grom wrote, "While we've been long-term fans of CEO Walter Robb and the team down in Austin, we struggle with: (1) what the appropriate multiple for the stock is in light of slowing sales and future GPM uncertainty and (2) a tricky NT set-up as both Street numbers and WFM's LT strategic vision are too optimistic."
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 a number of strengths, 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, growth in earnings per share, increase in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 10.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- WHOLE FOODS MARKET INC has improved earnings per share by 7.9% 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 ($1.53 versus $1.47).
- 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 6.3% when compared to the same quarter one year prior, going from $142.00 million to $151.00 million.
- Net operating cash flow has slightly increased to $240.00 million or 5.26% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -14.87%.
- 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 0.89 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: WFM Ratings Report