Whole Foods Shows Great Earnings As Valuation Premium Looms (WFM)

Whole Foods Market, Inc. (NASDAQ: WFM) has managed to turn in yet another solid earnings report.  The organic and natural foods grocer (and luxury store) has turned in $0.64 EPS on 14% higher sales of $2.67 billion.  Thomson Reuters had estimates of $0.59 EPS and $2.67 billion in revenues.  Comparable sales were up 7.8% and this appears to be 3 years or so where the company has turned in above-expectations on earnings.

During the quarter it generated $255.8 million in cash flow from operations, with free cash flow of $153.9 million. Whole Foods has already opened four stores its third quarter and expects to open five additional stores, including one relocation. The company currently has 324 stores totaling approximately 12.3 million square feet.

Whole Foods is raising its prior revenue forecast of 13.5% to 15.0% up to a new range of 14.8% to 15.6%; and it is raising same-store sales growth ranges of 7.3% to 8.8% previously offered up to a new range of 8.2% to 8.9%.  The company is also raising its annual earnings forecast for 2012 from a prior range of $2.28 to $2.32 up to $2.44 to $2.47 per share.  Estimates are $2.34 EPS.

Shares closed up 0.2% at $84.41 and the 52-week range was $53.32 to $86.35.  The after-hours reaction has shares up 2.4% at $86.50 in the after-hours and that will mark yet another all-time high if the trading level holds here tomorrow.

Keep in mind that Whole Foods now trades at almost 35-times its expected 2012 earnings at the highest point of its projected earnings range.

JON C. OGG