Has Whole Foods Got Its Groove Back?

Here is a quick look at how analysts responded to the most recent earnings report:

•  The stock was maintained as Hold at Jefferies, but the price target was raised from $41 to $43.
• Argus maintained its Buy rating and lifted its one-year price objective to $50 from $48.
• Canaccord Genuity maintained its Buy rating and a $49 price target.
• Wedbush reiterated a Neutral rating and a $40 price target on the shares, citing store remodeling as a potential boost to same-store sales.
• Morgan Stanley reiterated an Overweight rating and a $50 price target, also citing the company’s efforts at a turnaround.

It may be fair to say the analysts seem cautiously optimistic.

For the quarter, the high-end grocery store chain posted adjusted diluted earnings per share (EPS) of $0.35 on revenues of $3.30 billion. In the same period a year ago, the company reported EPS of $0.32 on revenues of $2.98 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.32 and $3.26 billion in revenues.

For the full year, Whole Foods posted EPS of $1.56 on revenues of $14.20 billion, compared with fiscal 2013 EPS of $1.47 on revenues of $12.92 billion. The consensus estimates called for EPS of $1.54 on revenues of $14.19 billion.

Same-store sales rose 3.1% in the quarter, compared with the same period a year ago. The two-year comparable store growth came in at 9%.

Whole Foods has had to lower some prices to better compete with Kroger Co. (NYSE: KR) and Wal-Mart Stores Inc. (NYSE: WMT), which both now tout their natural and organic foods. By doing so, however, the company forfeits its place at the high-end of the market. Its recent Responsibly Grown fresh-produce ranking system is likely aimed at returning to the store some pricing power for produce grown under more demanding conditions.

Whole Foods shares traded up more than 6% after-hours following the report, and they were up about 10.7% to $44.28 in early afternoon trading Thursday. Shares are still down about 23% year-to-date and have traded in a 52-week range of $36.08 to $64.72.

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