Why Whole Foods Market Shares Passed Their Expiration Date Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Upscale grocer Whole Foods Market (NASDAQ: WFM  ) has lost 10% of its value today, after issuing underwhelming guidance -- largely the same guidance, really -- for the rest of its fiscal year.

So what: Whole Foods' first quarter results showed $3.86 billion in revenue and $0.78 in earnings per share. Revenue was roughly in line with the consensus of $3.87 billion, and EPS came in $0.01 better than Wall Street's expectations. Same-store sales growth, which was an impressive 7.2%, nevertheless came in below the roughly 7.7% estimate offered by analysts.

Looking ahead to the rest of fiscal 2013, Whole Foods is holding firm in its previous guidance range of 12% to 14% revenue growth -- which roughly translates into a $13.1 billion to $13.4 billion range over 2012's result -- and $2.83 to $2.87 in EPS. Analysts were looking for $2.89 in EPS, and Whole Food's annual comparable-store sales growth guidance of 6.6% to 8% is also below its prior projections of 6.5% to 8.5%. Identical-store sales growth guidance, at 6.3% to 7.7%, is tighter, but falls below the 8% high end of Whole Foods' earlier guidance

Now what: Whole Foods is not cheap for a grocer. Today's reaction seems a little overwrought, but some large stockholders may have simply been seeking a reason to get out. The fundamentals remain strong, and nothing in Whole Foods' guidance indicates that it will cease to be a sector outperformer in 2013.

It's hard to believe that a grocery store could book investors more than 30 times their initial investment, but that's just what Whole Foods has done for those who saw the organic trend coming some 20 years ago. However, it may not be too late to participate in the long-term growth of this organic foods powerhouse. In this brand-new premium report on the company, we walk through the key must-know items for every Whole Foods investor, including the main opportunities and threats facing the company. We're also providing a full year of regular analyst updates to go with it, so make sure to claim your copy today by clicking here.


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