Spillage in Aisle Five
Whole Foods Market (WFM) Whole Foods Market, Inc. operates as a retailer of natural and organic foods. In 2015, the company had approximately 417 stores worldwide. Whole Foods Market, Inc. was founded in 1978 and is headquartered in Austin, Texas.
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Sometimes you make a plan and it doesn’t work out. We bought WFM at $40.77 on the expectation that they would overcome their challenges as they have previously done.
Based on their latest announcement, earnings will continue to be challenged and we are not encouraged by managements’ forecast of $1.50 EPS for 2016 and this includes a $1bln share buyback. Not a good sign.
Purple Chips range is Low: $0 and High $36
EXIT WHOLE FOODS AT $29.00 (WFM-US) FULL POSITION
TOTAL RETURN (including dividends): -28.2%,
PURPLE CHIPS TARGET: $36 POSITION SIZE: FULL (5.0%) P/E: 18.5X DIV: 0.52 (1.7%) MKT CAP: $10.7B Cash: $700M RETURN ON CAPITAL: 26.7% EARNINGS YIELD: 10.0% 5 YR EPS Growth rate*:10.0% P/E/G Ratio: 1.85X Current EPS: $1.56 2016 EST.: $1.50 2017 EST.: $1.80
*Blended growth rate= 2/3 historical (5yrs), 1/3 forward.
