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Whole Foods Market: So What Really Drives This Stock Down All The Time?

Summary

Whole Foods Market is a simple avoid based on fundamental analysis.

A variety of metrics started to decline. Short investors took advantage, and they are currently in control.

Future profit margin is under severe pressure as Whole Foods Markets faces a variety of issues (pricing power, increased competition, the economy and more).

Whole Foods Market (NASDAQ:WFM) was founded in Austin, Texas, when four local businesspeople decided the natural foods industry was ready for a supermarket format. Now they are known as one of the places consumers can visit when they are looking for the finest natural and organic foods available in a number of countries all over the world.

As an addition to the normal supermarket, Whole Foods Market really really something to add to the daily shopping of a consumer: organic products. But did Whole Foods Market also offer something special and additional to shareholders who were looking for something extra? If we look at the period after the mortgage crash, the ride up to 2014 was incredible (but similar to many other companies). Unfortunately since 2014 WFM has been an utter disappointment:

The question is: what drove this stock up and what is currently making it go down? I have covered Kroger (NYSE:KR), a retail competitor from a pricing perspective, on Seeking Alpha. This is a case where investors shouldn't just focus on fundamental performance, but also look at investor sentiment. I can extend this to Whole Foods and look at what exactly drives the stock. This article will specifically investigate which fundamental factors drive the stock of Whole Foods Market and which have no apparent impact.

Whole Foods: Let's look at revenue, earnings, debt and profitability margin

Normal fundamental analysis gives us insight on how a company is growing its business through increasing its revenue, how much it retains from this earnings (profit margin) and how much debt they have on the books - which could either jeopardize profitability (through interest expense and other factors) or it could simply be used to grow the business. If the latter is true, then it is of no immediate concern.

Looking at revenue, there has been significant growth over the last few years but not aligned with share price movement:

With revenue growing a factor 0.5 in contrast to the share price of WFM, it's clear to say that the trend in revenue growth has been of no significant impact to the share price.

Clearly, we are looking for something that correlates with the share price. If overall...


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