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.
The Motley Fool recommends Whole Foods Market. The Motley Fool owns shares of Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.