Whole Foods Market Inc. (WFMI), one of the leading natural and organic foods supermarkets, is scheduled to report its second-quarter 2011 financial results on May 4, 2011. The current Zacks Consensus Estimate for the quarter is 46 cents a share. For the quarter under review, revenue is $2,369 million, according to the Zacks Consensus Estimate.

First-Quarter 2011, a Synopsis

Whole Foods Market posted better-than-expected first-quarter 2011 results on the back of strong sales as shoppers flocked to the grocery chain. The quarterly earnings of 51 cents a share surpassed the Zacks Consensus Estimate of 45 cents, and jumped 59.4% from 32 cents earned in the prior-year quarter.

The company sustained its top-line growth momentum with revenue climbing 13.8% to $3,003.7 million in the quarter and comfortably surpassing the Zacks Consensus Estimate of $2,953 million. Consumers, who had cut back their spending during the recession, are now returning to the chain.

Whole Foods said that comparable-store sales rose 9.1% in the quarter, reflecting a substantial improvement over a 3.5% growth witnessed in the same-quarter last year, and registered an increase of 40 basis points sequentially.

Second-Quarter 2011 Zacks Consensus

Analysts considered by Zacks, expect Whole Foods to post second-quarter 2011 earnings of 46 cents a share. The current Zacks Consensus Estimate reflects a growth of 21.1% from the prior-year quarter earnings. The current Zacks Consensus Estimate for the quarter ranges between 44 cents and 51 cents a share.

Zacks Agreement & Magnitude

Of the 20 analysts following the stock, only 1 analyst has revised the estimate upwards and none of them have lowered their estimates in the last 30 days, thus having no significant impact on the Zacks Consensus Estimate. In the last 7 days, none of the analysts revisited their estimates, keeping the Zacks Consensus Estimate unchanged.

Mixed Earnings Surprise History

With respect to earnings surprises, Whole Foods has met as well as topped the Zacks Consensus Estimate over the last four quarters in the range of 0.0% to 17.9%. The average remained at 14.3%. This suggests that Whole Foods has beaten the Zacks Consensus Estimate by an average of 14.3% in the trailing four quarters. Given the past performance we expect the company to meet or outperform the Zacks Consensus Estimate.

Whole Foods in Neutral Lane

Whole Foods Market with a strong brand image offers investors one of the strongest growth profiles in the industry, and the stock is poised to surge, as the demand for natural and organic products improves. The company is revamping its pricing strategy and concentrating more on value offerings, while maintaining healthy margins.

The stringent cost-control measures, effective inventory management, and improved store-level performance are driving earnings growth. The company in the wake of better-than-expected first-quarter 2011 results now expects a sales growth in a band of 10.7% to 12.8% and bottom-line increase in a range of 23% to 26% in fiscal 2011. However, stiff competition and sluggish economy may dent the company’s performance.

Currently, we have a long-term Neutral rating on the stock. However, Whole Foods, which faces stiff competition from other supermarket operators such as The Kroger Company (KR) and Supervalu Inc. (SVU), holds a Zacks #2 Rank, which translates into a short-term Buy recommendation.

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