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Whole Foods Market Continues Its Slide in the Stock Market

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WFM’s stock market performance

Whole Foods Market (WFM) has delivered below-average stock market performance this year. The company’s stock price has come down by 10.6% year-to-date as of April 26, 2016, after losing 33% of its value in 2015.

In comparison, the other two pure-play organic companies—The Fresh Market (TFM) and Sprouts Farmers Market (SFM)—have gained 22% and 5.3%, respectively. Although The Fresh Market has been riding high on the acquisition bid from Apollo, Sprouts Farmers Market’s stock market performance is more a result of its strong financial performance.

Kroger (KR) is the worst-performing major supermarket and has lost around 10.7% year-to-date (or YTD). It is interested to note that KR was the best performer among the supermarket peer group in 2015 (+32%) and the only supermarket with positive stock returns during the year.

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Dividend payments

Whole Foods Market (WFM) pays healthy dividends to its shareholders. The company increased its quarterly dividend payment by 3.8% to $0.14 per share in fiscal 1Q16.

The company has grown its dividends by around 40% over the last five years. WFM’s one-year forward dividend yield stands at 1.9% as compared to Kroger’s 1.2% and Walmart’s (WMT) 2.9%. Sprouts Farmers Market (SFM) and The Fresh Market (TFM) do not offer dividends.

Share buybacks

Whole Foods Market initiated a $1 billion share buyback program in November 2015. Under this plan, the company repurchased 21.2 million shares worth $634 million during fiscal 1Q16.

Total shareholder returns

Whole Foods Market’s (WFM) continuous poor performance in the stock market in 2014 (-12% YTD), 2015 (-33% YTD), and the current year (-10.6% YTD) has resulted in lower total returns on the company’s common stock as compared to its peers. The company’s one-year and three-year shareholder returns stand at -39% and -11.4%, respectively.

In comparison, Kroger has delivered 3.7% to its shareholders through dividends and stock price appreciation over the last year and 30.7% over the last three years.

Investors seeking to add exposure to Whole Foods can consider the VanEck Vectors Retail ETF (RTH), which invests 1.5% of its portfolio in the company.

The final part of this series will examine WFM’s current valuations.

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