Why Whole Foods Might Be a Stale Selection

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Whole Foods Market (NASDAQ: WFM  ) slipped a bit this morning after Goldman Sachs downgraded the natural foods retailer from "buy" to "neutral."

So what: Along with the downgrade, analyst Stephen Grambling planted a price target on Whole Foods of $57 (from $66), pretty much exactly where the stock sits now. While contrarian traders might be attracted to yesterday's big pullback -- triggered by weak sales guidance -- Grambling believes the upside remains limited given the stock's still-lofty valuation and softening top line.

Now what: Goldman lowered its 2014 EPS estimate for Whole Foods from $1.79 to $1.71 and from $2.19 to $2.03. "While we still view WFM as a secular winner with continued opportunity for store growth and margin expansion, we are lowering our comp estimate to reflect the softer top-line trajectory relative to broader industry trends," Goldman noted. "Furthermore, with shares still trading at 34X our downwardly revised but above guidance NTM EPS estimate, we believe a Neutral rating is warranted and would look for a better entry point, all else being equal." But while Whole Foods is certainly no bargain, the recent pullback might be giving Fools a chance to purchase some quality growth at a reasonable price. 

More reliable ways to wealth
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.


Read/Post Comments (1) | Recommend This Article (4)

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.

  • Report this Comment On November 09, 2013, at 11:49 AM, Dunc9602 wrote:

    I know everyone has their own opinion but do you know this is a Stock Advisor pick. I find it interesting when Fool writers have differing opinions on stock. I don't know who to listen to!

Add your comment.

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: 2718894, ~/Articles/ArticleHandler.aspx, 10/20/2014 5:58:06 PM

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...


Advertisement