Whole Foods’ Rotten Earnings

Investors smelled something rotten in Whole Foods, $WFM, earnings.

Shares fell 13% in after hours trading minutes after the company released its second quarter results. And some investors on StockTwits.com said shares, which traded around $42 in the after hours market, could continue to shed another dollar or so.

$WFM down over 9% after-hours after missing EPS & guidance. Potential weekly support @ $41 or so: http://stks.co/b0WP1

— Jake Huska (@MarketPicker) May. 6 at 04:12 PM

Whole Foods disappointed across the board. The organic grocery chain reported EPS of $0.38 on $3.3 billion in sales, missing Wall Street consensus’ call for $0.41 per share on $3.34 billion in revenues. The company also cut guidance. Management predicted full year earnings per share of between $1.52 and $1.56 on around $14 billion in sales. Analysts had predicted $1.61 EPS on $14.36 billion in revenues, according to stats on Yahoo Finance.

The results spurred analysts into action. Credit Suisse immediately cut $5 from its $55-per-share price target, according to the Analyst Ratings Network. The firm has a neutral rating on the stock.

Investors speculated that Whole Foods was seeing less growth due to higher food prices. Main street incomes haven’t grown enough, they argued, to support the price inflation in Whole Foods’ aisles.

$WFM walk through this store one time and you will see the true inflation the nation is going through. CPI is a mirage.

— Dumbperson (@Dumbperson) May. 6 at 04:12 PM


$WFM When folks in Manhattan complain about the prices… you know you've got a problem

— tickertutor (@tickertutor) May. 6 at 04:12 PM

Others said that Whole Foods was becoming a niche player rather than the grocer of the future. As much as people might want organic food, they are not willing to pay much more for it—especially given that Walmart, $WMT, is more aggressively marketing its cheaper organic produce.

$WFM an #organic stock split, so to speak :: Mackey stuck w a "niche" play over a "growth" model : will be listening to conf call

— Jacob Joseph (@cometkarov) May. 6 at 04:16 PM

Not everyone was a bear, however. StockTwits’ sentiment analytics pegged the crowd as divided down the middle on Whole Foods’ ultimate performance. About half of the community called for continued losses while the other half saw the fall as a buying opportunity.

Bulls noted that the stores hardly seemed wanting for traffic and parking lots were often full of people with packed carts.

$WFM all stores are busy. How can they miss the earning?

— Eileen Li (@estocks) May. 6 at 04:15 PM

But many investors said shoppers were not willing to stomach higher prices for Whole Foods’ fare. And they predicted that shares could fall below $40-per-share.

$WFM PT was $43 but now it's $37

— LaDucTrading (@SamanthaLaDuc) May. 6 at 04:22 PM


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