Over the last two years, Whole Foods' (WFM, Financial) new store sales have averaged to $503,000 of weekly sales per store, making the sales per gross square foot of $722 and weighted average productivity levels of 83%. Better sales volumes have led to 4% solid store contribution. Crucially, Whole Foods comp stores sales lesser than just two years old have returned 15% on invested capital on an average, much better than its weighted average cost of capital.
The bakery departments and prepared foods are also the main differentiators having collective sales rising $2.7 billion, or 19% of total sales.
Growing at a good pace
Whole Foods added an impressive 38 new stores in the year, increasing to 15 million square feet through 399 stores in 42 states and three countries. Store operations improved significantly for the fifth straight year in a line and the store contribution margin improved by double-digits for the third year consecutively. Whole Foods generated a solid 15% return on invested capital and returned $750 million to its shareholders by offering impressive dividends and continued stock repurchases and closed the year with about $1 billion of investments and cash.
Whole Foods has begun an innovative affinity program, expanding the single-store test to 11 stores since the beginning.
Whole Foods same-store sales increased by 3.1% in the fourth quarter of 2014 and matched the average consensus estimates.
It is also competing effectively with its rivals by introducing a “responsibly grown” rating technique for its flowers and foods produce.
Conclusion
The trailing P/E and forward P/E ratios of 30.63 and 24.89 respectively represent the solid cost-cutting efforts of the company. Also, it’s comparable to the industry’s average P/E of 24.03, going forward. The PEG ratio of 2.19, above 1 indicate slower growth and comparable to the industry’s average of 1.45. The profit margin of 4.08% is very nominal. The revenue per share and diluted EPS of 38.59 and 1.56 respectively signifies healthy investor earnings.
The quarterly revenue growth and quarterly earnings growth of 9.40% and 5.80% respectively suggests satisfactory investor earnings growth. The current ratio of 1.40 depicts the robustness of the company’s balance sheet. Finally, the investors are advised to invest into Whole Foods Market, Inc. looking at the solid long-term growth prospects indicated by the CAGR for the next 5 years per annum of 12.71% comparable to the industry’s average of 14.13% and expect promising returns in a long run.
