Whole Foods (WFM) Stock Surges After Earnings

Shares of Whole Foods Market Inc. (WFM) increased 10 percent in afterhours trading on Tuesday and were up +6.30 or +6.79 percent to $99.10 per share in pre-market trading early Wednesday. The company reported better than expected second quarter earnings after the market close. Whole Foods Market Inc. stock closed at $92.80 per share in Tuesday's regular trading session. Whole Foods Market Inc. reported its fiscal second quarter profit increased to $0.76 per share on revenue of $3.03 billion.

The analyst consensus for earnings was for $0.73 per share on revenues of $3.04 billion. The company also announced that its board had approved a two-for-one stock split and raised its guidance for full year 2013 earnings to $2.86 - $2.89 per share, analysts forecast full year 2013 earnings at $2.87 per share. Daily Chart
Austin, Texas based Whole Foods Market Inc. has had phenomenal growth since its founding in 1978 and is the largest natural products and organic grocer in the United States. The company currently runs stores in 349 locations with plans for expansion. Whole Foods plans to open three more stores in the current quarter with twelve more opening next quarter. The company is looking to open a total of 1,000 stores in the United States over the longer term and has had a growth rate of more than ten percent over the past several years. Growth rates in recent quarters have exceeded 13 percent, with identical store sales growth averaging 8 percent on balance with comparable store sales growth increasing by +6.9 percent in the current quarter. In the earnings press release, John Mackey, Whole Foods Co-Chief Executive Officer and Director stated that "The demand for fresh, healthy foods continues to grow, and we are leading the way as America's healthiest grocery store with close to seven million customers visiting our stores each week. We believe we will continue to gain market share as we accelerate our new store openings improve our relative value proposition while maintaining our high quality standards, and further differentiate our shopping experience." After the earnings release, Mackey told an investor conference that, "Our solid performance in capital discipline generated $178 million in free cash flow. We invested $109 million in new and existing stores, repurchased $37 million of stock and returned $37 million in dividends to our shareholders. We ended the quarter with $1.3 billion in cash and investments and $409 million in share repurchase authority. We reported 6.6% identical store sales growth and I am pleased with the momentum we saw during the quarter." In addition to the earnings release, Whole Foods announced a two for one stock split to stockholders of record on May 17th, 2013, to be paid with one additional share of common stock for each share owned on May 29th, 2013. Shares bought between May 17th and May 29th will come with a "due bill" entitling the buyer to an additional share for each share bought. With the rate of growth the company has seen over the past few years and the most recent quarters, Whole Foods stock has benefited with a long term uptrend, which will most likely continue as the company continues to grow. Other News About WFM Whole Foods CEO Regrets Comparing Obamacare to 'Fascism' Co-CEO John Mackey regrets comments made in a WSJ article. Whole Foods Says it Exceeds Detroit Hiring Goal Ahead of June Opening Company has hired 91 employees for their Midtown store with 70 percent from Detroit. Other Stocks in the News JC Penney Cites Ousted CEO's Plans in Sales Miss Former CEO blamed for lower sales. Keep Wal-Mart Out of Some Financial Services, Bankers Ask Group of bankers ask Federal Reserve to keep WMT out of the business. Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on May 8, 2013
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

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