“Whole Paycheck” Describes the Store and the Stock; Growth is Only Middling for Such a Highflyer

Investors are paying a pretty hefty price for Whole Foods (WFM), given that sales growth is merely returning to historic averages after dipping at the start of 2011.

To be sure, Whole Foods recently reported another nourishing quarter. It beat expectations and boosted its 2012 forecast, triggering a round of similar hikes by the analyst community and another move higher in its stock price.

Whole Foods Market Stock Chart by YCharts

And while comparable store sales growth in its first fiscal quarter almost doubled the average growth rate of the past five years at 8.7%, the company's own expectations for the rest of this year are for comps to rise by between 6.6% and 8.8%. Not exactly the signal that sales are going to explode higher out of the range they've been in for a while.

Whole Foods Market Price / Sales Ratio Chart by YCharts

Granted, Whole Foods is more efficient at turning sales into profits. But is the significantly higher valuation justified by the better margins and performance? The Whole Foods PE ratio is 40-ish. Kroger (KR), with a paltry PE of about 12, nearly matches Whole Foods' overall revenue growth.

Whole Foods Market Revenue Growth Chart by YCharts

Whole Foods Market Operating Margin TTM Chart by YCharts

Michael McHugh is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings, stock screener and portfolio strategies.