Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Bull Case for Whole Foods

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Below, we've analyzed Whole Foods Market in preparation for tomorrow's live chat with Whole Foods co-CEO John Mackey. He'll be joining us on Tuesday, Aug. 10, from 3 p.m. to 4 p.m. ET on You're invited, too!

Whole Foods Market (Nasdaq: WFMI  ) shares took a beating last week after the company released its quarterly results. But there are plenty of reasons for investors to feel bullish about the upscale grocer.

The organic retailer is bucking the trends in the beleaguered grocery-stock universe. Investors should be shopping for stocks backed by strong fundamental businesses, and Whole Foods seems to fit the bill. The company has profitability, growing sales, and low debt levels down pat.

Last month, I compared Whole Foods against several grocery rivals. Let's update that matchup with last week's new data from Whole Foods' most recent quarter:


Earnings/Loss Per Share (TTM)

Revenue Increase/Decrease (TTM)

Gross Profit Margin

Debt-to-Equity Ratio

Whole Foods Market





Safeway (NYSE: SWY  )





Kroger (NYSE: KR  )










*All data from Capital IQ; TTM = trailing 12 months.

Whole Foods exhibits solid profitability, a healthy sales increase, the highest gross profit margin in the table, and a manageable debt load. Granted, Whole Foods' shares command a lofty price, with a P/E ratio of 28. In comparison, SUPERVALU trades at just seven times earnings. Then again, Whole Foods has an excellent shot at achieving high growth for years to come.

There are only about 300 Whole Foods stores. Compare that to about 1,700 Safeway stores, 2,470 Kroger stores, and 2,350 SUPERVALU stores. Even if the chain's organic food and higher prices aren't for everyone, Whole Foods still has lots of room for expansion, both domestically and internationally.

Bulls, bears, questions, and answers
A nasty economic environment and flagging consumer confidence undeniably threaten Whole Foods and its rivals. So does low-priced competition, not only from the grocers above, but also from major-league discounters that sell groceries, including Wal-Mart (NYSE: WMT  ) and Costco (Nasdaq: COST  ) .

Still, Whole Foods boasts a solid brand, and it has worked hard to evolve its business, developing a value image to combat its old "Whole Paycheck" reputation.

In the recent quarterly earnings conference call, co-CEO Walter Robb attributed the company's healthy 8.4% same-stores sales increase to higher transactions and fuller shopping carts in the checkout line. He also linked that increasing figure to a successful improvement in Whole Foods' price-competitiveness, citing a Nielsen study that showed improving trends in customers' sentiment related to Whole Foods' value efforts. Indeed, Robb said Whole Foods is gaining market share.

Last but not least, Whole Foods' sense of purpose gives the company yet another competitive advantage. Co-CEO and founder John Mackey is a vocal proponent of conscious capitalism, which takes all stakeholders into consideration. The company offers its employees health care and other benefits, and has progressive policies, like capping executives' pay at 19 times the average pay of its workers. According to a recent examination at Standard & Poor's companies, CEO pay averaged 319 times that of the average worker in 2008.

By comparison, Mackey no longer takes a salary, having voluntarily given it up in late 2007. If you'd like to hear more from Mackey about his pay cut or his corporate philosophies, join him in a live chat with Fools tomorrow, Tuesday, Aug. 10, from 3 p.m. to 4 p.m. ET.

The most recent quarterly results imply that Whole Foods is still a winner, even if some investors got spooked. What do you think? Let loose with your bullish (or bearish) thoughts, or type in the questions you'd like us to ask Mackey in tomorrow's live chat, in the comments box below.

Alyce Lomax owns shares of Whole Foods Market. Costco and Wal-Mart are Motley Fool Inside Value picks. Costco and Whole Foods are Stock Advisor recommendations. The Fool owns shares of Costco. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1263845, ~/Articles/ArticleHandler.aspx, 10/21/2016 7:47:19 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 10 hours ago Sponsored by:
DOW 18,162.35 -40.27 -0.22%
S&P 500 2,141.34 -2.95 -0.14%
NASD 5,241.83 -4.58 -0.09%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/20/2016 4:00 PM
COST $150.04 Up +0.59 +0.39%
Costco Wholesale CAPS Rating: ****
KR $30.92 Down -0.09 -0.29%
Kroger CAPS Rating: ****
SVU $4.46 Down -0.12 -2.62%
SuperValu CAPS Rating: **
SWY.DL $0.00 Down +0.00 +0.00%
Safeway CAPS Rating: **
WFM $28.29 Down -0.43 -1.50%
Whole Foods Market CAPS Rating: ****
WMT $68.73 Down -0.16 -0.23%
Wal-Mart Stores CAPS Rating: ***