Message Font: Serif | Sans-Serif
 
No. of Recommendations: 5
SSS Trans Basket
Jan15 +4.5% 408
Sep14 +3.1% 401
July2014 +3.9% +2.0% +1.9% 388
Apr2014 +4.5% +2.4% +2.1% 379

3-2-15, $56.49, 20461-19494, 34.8-33.2, 18.8-17.9, dy-0.9%, fcy-1.7%, gcy=5.6%, ni=588, cf=1088, cex=763

Conclusion
In Q1 sales were up 10% (comp +4.9) with sqft up 9.4% with operating margins lower from pricing changes hitting GM as predicted by the company. Comps have accelerated a bit into Feb and they are up against easier compares. Assume 1.75 this year (11% sales; 12% EPS) for Sep 2015 and another 10% into next year gets you to about $2 for 2016 or 28.3x. The company can at least triple its store base so ownership here is based on long-term growth or the gross cash flow yield given that CapEx supports a strong company.

Time to buy?
It went down before. See below - this is allowing short-term news to paralyze ownership. This is all about courage. But I don't think now is time to own it in quantity but this evaluation sure was.

5-7-14, $38.94
Conclusion
WFM is not a buy at this time. The latest results have led to a lowering of management guidance for the year, margins are near peak and will likely decline as management cuts prices in response to increasing competition in the space, and compares though moderating are still quite tough. They still have a strong balance sheet, pay a dividend, buy shares, and are holding to a sustained 10% growth rate with plenty of room until saturation. Trades for 22x VL2014 EPS estimate of $1.60 and 18.5x VL2015 estimate of $1.90 on an EV basis. These assume sales growth of 11.5% and 13% and EPS growth of 9% and 19%. The bottom line seem aggressive with 2014 above management’s updated guidance and 2015 well above management’s vision. In fact Stern Agee moderated their 2014 EPS to $1.56 from $1.62 and their 2015 EPS from $1.93 to $1.76.



Position
I own a dink. A very few own it.

Q1 Jan 15
Sales up 10% (comp +4.9% or +5.1% fx)
Lower GM; flat otherwise
Operating up 6%
Did 46c vs 42; -4% share count

Stores
Sqft up 9.4%

Saturation
Currently seen at 1200

Forecast
Year at 9% sales; comp low to mid single; 9 to 10% 38-42 new stores with 5-6 relocations
EBITDA margin of 9%; ROIC more than 14%
Q2 to 2-8 – up 4.9%

Notes
Easter will help Q2 and hurt Q3 – maybe 0.5 to 0.6%
200 refreshes this year – 40 in Q1; adding Taprooms and wine bars; 2% of sales from Apple Pay; home delivery
Plans for expense reduction to be focused on pricing; marketing; tech; sees long-term GM reductions

Research
CG at 1.72 for 2015 (432 stores); 1.88 (468); SA 1.77 and 2.08; CS 1.76 and 2.00
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.