Whole Foods Market, Inc. (WFM): Is This Organic Foods Leader Too Expensive?

The Kroger Co. (NYSE:KR) is a more traditional grocer, and in my opinion, is the most reasonably priced of the three. Kroger operates almost 2,500 stores in 31 states, making it one of the largest supermarket chains in the United States. Kroger is also the least speculative and most mature of the companies featured here, however, analysts feel that there is some room for further earnings growth. Kroger trades for 14.1 times this year’s expected earnings, which are projected to grow by 11% and 10% over the next two years. Not quite as exciting as the other two companies mentioned, but very impressive relative to the valuation of the stock.

What to watch for

Personally, I would stay out of Whole Foods Market, Inc. (NASDAQ:WFM) right now, at least until after the earnings report. Shares seem to be on the expensive side, and with the company’s reactivity to earnings releases, there is a strong possibility for a large jump in price in either direction.

Basically, aside from the earnings numbers themselves, pay particular attention to the company’s growth progress. If Whole Foods Market, Inc. (NASDAQ:WFM)’ is still aggressively growing with no signs of slowing down, it could be very well-received by the market. On the other hand, if the earnings numbers come in a bit weak, it could create a more palatable buying opportunity for the leader in the organic and natural food trend.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool recommends Whole Foods Market. The Motley Fool owns shares of WhiteWave Foods and Whole Foods Market.

The article Is This Organic Foods Leader Too Expensive? originally appeared on Fool.com.

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