Morningstar Rating

Stock Research and Analysis

by Ken Perkins

Bulls Say

With the potential to nearly triple its store base and operate more than 1,200 units, Whole Foods has a long growth runway in a segment of the grocery market with limited (but increasing) competition.
Higher private-label penetration should allow Whole Foods to further increase industry-leading gross and operating margins since private-label products can generate higher gross margins.
Whole Foods' store employee incentives help to generate high labor productivity and service levels and enhance its brand intangible asset. Read more 

Bears Say

Whole Foods' high returns on capital have attracted new entrants such as Sprouts Farmers Market and The Fresh Market, and competition could intensify.
New stores opened in regions where lower per capita incomes and education levels may not generate sales per square foot levels comparable to the corporate average.
Traditional grocers, mass merchants, and wholesale clubs are expanding their natural and organic food assortments. Price competition could become very fierce if these firms tap their scale and negotiating power to enter the market. Read more 

Management

We assign Whole Foods an Exemplary stewardship rating, as we believe management's capital allocation policies have bolstered the firm's economic moat. Whole Foods' returns on invested capital have improved over the past several years, largely because   Read more 

Profile

Whole Foods Market is the world's leading retailer of natural and organic foods and is the first Certified Organic grocer in the U.S. Whole Foods' only operating segment   Read more 

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