Whole Foods Market (WFM) Falls Further As It's Water-Logged And Getting Wetter

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Whole Foods Market ( WFM) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Whole Foods Market as such a stock due to the following factors:

  • WFM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $135.6 million.
  • WFM has traded 3.6 million shares today.
  • WFM traded in a range 203.6% of the normal price range with a price range of $1.29.
  • WFM traded below its daily resistance level (quality: 204 days, meaning that the stock is crossing a resistance level set by the last 204 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on WFM:

Whole Foods Market, Inc. operates as a retailer of natural and organic foods. The stock currently has a dividend yield of 1.2%. WFM has a PE ratio of 26. Currently there are 10 analysts that rate Whole Foods Market a buy, no analysts rate it a sell, and 13 rate it a hold.

The average volume for Whole Foods Market has been 4.2 million shares per day over the past 30 days. Whole Foods Market has a market cap of $15.3 billion and is part of the services sector and retail industry. The stock has a beta of 0.94 and a short float of 5.2% with 5.42 days to cover. Shares are down 16.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Whole Foods Market as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 9.8%. 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 15.8% 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 $1.56 versus $1.47 in the prior year. This year, the market expects an improvement in earnings ($1.73 versus $1.56).
  • 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 12.0% when compared to the same quarter one year prior, going from $142.00 million to $159.00 million.
  • 38.68% 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 4.35% is above that of the industry average.
  • Net operating cash flow has increased to $322.00 million or 14.18% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.81%.

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