Whole Foods Earnings: An Early Look

Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Whole Foods Market (WFM). The high-end grocery chain revolutionized the industry with its natural and organic offerings and commands premium prices from its core shoppers, who are willing to pay up for its products. Let's take an early look at what's been happening with Whole Foods Market over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on Whole Foods Market

Source: Yahoo! Finance.

Will Whole Foods Market deliver tasty profits this quarter?
Analysts are locked into their earnings estimates for Whole Foods, which haven't budged at all in the past three months. The stock has done reasonably well, though, rising almost 6% since early November.

Whole Foods has been riding the wave toward higher-quality food for well over a decade, and the trend has been surprisingly resilient despite ups and downs in the economy. Even during tough times, shoppers have been willing to pay up at Whole Foods, and that has created revenue growth and profit margins that are the envy of the entire grocery business.

In fact, Whole Foods has disrupted the industry so much that competitors have felt the ripples from its success. United Natural Foods (UNFI 1.59%) supplies Whole Foods as the grocery company's primary distributor, and the relationship now represents more than a third of United's net sales. A deal to keep supplying Whole Foods through 2020 should help both companies maintain their competitive edges. Similarly, Hain Celestial (HAIN -2.16%), maker of organic products, is a big supplier to United and Whole Foods, and has seen its shares soar recently based on the same trends that have vaulted Whole Foods higher.

In this quarter's report, look for signs of how Whole Foods is responding to the uproar elsewhere in the grocery industry. SUPERVALU's (SVU) big deal with Cerberus has implications not just for its own struggling grocery business but for its peers as well. Although Whole Foods often stands apart from traditional retailers, it'll be interesting nevertheless to see whether company leaders comment on how they see Whole Foods moving forward through a changing industry environment.

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