After a Dip, Whole Foods Looks Tasty
by Julie Schlosser, FORTUNE

(FORTUNE Magazine) - Has Whole Foods become a bargain? Over the past decade Whole Foods Market (Research) (WFMI, $63) has led American consumers into a natural-food buying frenzy and has seen revenues soar 397%, to $4.7 billion in 2005. The Austin retailer's stock has climbed 520% over the past five years, more than 40 times the S&P 500's paltry 12% gain. But Whole Foods missed analyst estimates in the past two quarters, which has driven the stock down 17% since January. Even so, the shares still trade at a hefty multiple (45 times estimated 2006 earnings). The company also faces increased competition as other retailers launch their own organic offensives. Wal-Mart (Research) plans to double its organic and natural-food offerings in its superstores, while Safeway (Research) recently unveiled a new organic product line. Minnesota grocery chain SuperValu (Research) opened its first natural-food store in Indianapolis, and Wild Oats Markets (Research) continues to expand.

Still, one analyst who has taken a hard look at the stock thinks it's a buy. After visiting 15 stores recently, Banc of America's Scott Mushkin reiterated his $82.50 12-month stock target. "Whole Foods ... has a significant opportunity to expand its square footage by adding new stores in underpenetrated markets, moving into new markets, and relocating smaller, older stores in its established markets," he wrote in a recent note. He thinks CEO John Mackey will meet his stated goal of generating $12 billion in annual revenue by 2010. "The store combines its natural and organic roots with a European market feel," says Mushkin. "It's a unique concept, like Starbucks." Top of page

YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.
Manage alerts | What is this?
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.