Talking Numbers

A surprising turnaround story

A surprising turnaround story

Investors were hungry for Whole Foods shares Thursday after the organic food grocer posted a healthy earnings beat.

The stock soared more than 10 percent during the trading day and rose to its highest level in six months. The company said it saw a 3.1 percent pop in same-store sales growth in its fiscal fourth quarter, and gave an upbeat forecast heading into 2015.

The upscale grocer, dubbed "Whole Paycheck" by critics for its pricey produce, has gotten hammered on the year falling more than 20 percent. So, could Thursday's gains be the start of an even bigger rally?

"Technically, [Whole Foods] has seen strong development," said Prime Executions Steven Pytlar. "This is a chart that tells us the sentiment and the outlook for the company is changing."

Pytlar pointed out that after reporting disappointing earnings earlier this year, the stock saw a huge gap down and then traded sideways for much of the past six months.

"Buyers totally left the stock, buyer interest dissipated," Pytlar said. "After a very long phase of that, they report earnings [Wednesday] and you see this breakout through resistance," he added. "We think it could go higher."

But Chad Morganlander of Stifel's Washington Crossing Advisors isn't buying it.

"It's a great company, great management and I like shopping there, but unfortunately valuation doesn't make sense at this point and I have it as a hold."

Morganlander, who said he would be a better buyer at $35 per share, called the stock expensive. "Earnings per share growth rate is roughly 13 percent for 2015, revenues are growing at 10 percent and profit levels are roughly at 6.5 percent. But when you add it all up, it's just overvalued," added Morganlander. "It's a terrific company, but the valuation seems a bit toppy for me."

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