Office Depot Jumps, but Whole Foods Market Slides After Hours

The blue chips fell 130 points on a variety of triggers, while Whole Foods tumbled after hours. Earlier, Office Depot shares jumped on earnings.

May 6, 2014 at 10:00PM

Stocks sank today as tensions in Ukraine heightened and some big names including AIG and Twitter fell, putting pressure on their respective sectors. The Dow Jones Industrial Average (DJINDICES:^DJI) shed 130 points or 0.8% with drugmakers Merck and Pfizer again falling the furthest. The two declined as Merck sold its consumer health division, which includes brands such as Afrin cold remedy, for $14.2 billion, to Bayer, and AstraZeneca continued to signal that it was not interested in being acquired by Pfizer, outlining a plan to make sales grow to $45 billion within 10 years to help convince shareholders the company was better off as an independent entity.  Outside the Dow, results weren't any better, as the S&P 500 lost 0.9% and the Nasdaq fell 1.4%.

Only one economic report was released today, the March international trade report, which showed the trade deficit narrowing slightly from $41.9 billion to $40.4 billion, essentially in line with analyst estimates, but the figure was lower than government estimates in the first-quarter GDP report, meaning that figure could be revised downward to show a contraction. That would mark the first time the economy had shrunk in three years, though much of the blame has been pinned on poor winter weather, and data has shown a resurgence since then.



Turning to individual stocks, Whole Foods Market (NASDAQ:WFM) plummeted after hours, falling 14% on a rotten earnings report. The organic grocery chain missed the mark in nearly every category, reporting revenue, earnings, and guidance all below expectations. Though Whole Foods pioneered the organic foods segment it still leads, the company has come under pressure from increased competition, including mainstream grocers such as Wal-Mart and Kroger, which have entered the high-growth organic business. Whole Foods is still growing, but perhaps not at a rate that warrants the stock's high price tag. Revenue increased 9.7% in the quarter to $3.32 billion, below the consensus at $3.34 billion, as same-store sales improved 4.5%, a respectable clip. Net income, however, was flat at $0.38 per share as food costs rose and its gross and operating margins fell by 50 basis points. Analysts had expected a profit of $0.41 per share. The company also dialed down its full-year EPS guidance from a range of $1.58-$1.65 to a range of $1.52-$1.56, below the consensus at $1.61. With sales growing at just around 10%, it may be hard for the stock to justify a P/E close to 30.

Moving in the opposite direction today was Office Depot (NASDAQ:ODP), whose shares jumped 16% after the company reported earnings and announced a store closure plan this morning. The office-supply retailer posted an adjusted EPS of $0.07 against expectations of $0.03, and said that sales trends improved throughout the quarter. It also said it will close at least 400 of its nearly 2,000 stores in the U.S., adding $75 million to annual cost savings from its merger with Office Max. Still, overall sales fell 5% on a 3% decline in same-store sales, indicating continued problems for a contracting industry. Looking ahead, management said that "market trends will remain challenging," but lifted its operating income guidance to at least $160 million from at least $140 million because of early realization of cost savings. Office Depot's prospects look improved after today's report, but I'm still concerned about long-term profitability in a declining industry.

Will this stock be your next multibagger?
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with amazing potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303%! You don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends AIG, Twitter, and Whole Foods Market; owns shares of AIG and Whole Foods Market; and has options on AIG. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

Something big just happened

I don't know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. Motley Fool co-founder David Gardner (whose growth-stock newsletter was rated #1 in the world by The Wall Street Journal)* and his brother, Motley Fool CEO Tom Gardner, just revealed two brand new stock recommendations moments ago. Together, they've tripled the stock market's return over 12+ years. And while timing isn't everything, the history of Tom and David's stock picks shows that it pays to get in early on their ideas.

Click here to be among the first people to hear about David and Tom's newest stock recommendations.

*"Look Who's on Top Now" appeared in The Wall Street Journal which references Hulbert's rankings of the best performing stock picking newsletters over a 5-year period from 2008-2013.

Compare Brokers