Whole Foods (WFM) Q3 Earnings: Will The Stock Disappoint?

Whole Foods Market, Inc. (NASDAQ:WFM) is scheduled to release third-quarter fiscal 2016 results on Jul 27. The big question facing investors is, whether this retailer of natural and organic foods will be able to post a positive earnings surprise in the quarter to be reported. The company’s past performance reveals that it outperformed the Zacks Consensus Estimate in the second and first quarters of fiscal 2016, after missing the same in the fourth and third quarters of fiscal 2015. Let’s see how things are shaping up for this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Whole Foods is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Whole Foods has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 37 cents. Moreover, the company carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors Influencing this Quarter

Whole Foods is revamping its pricing strategy and concentrating on value offerings. Moreover, it has come out with a new store concept targeting millennials and to stave off competition. Analysts pointed out that increasing competition and aggressive pricing may weigh on Whole Foods’ quarterly performance as more and more companies are entering as well as expanding their presence in the Organic & Natural food business.

WHOLE FOODS MKT Price, Consensus and EPS Surprise

WHOLE FOODS MKT Price, Consensus and EPS Surprise | WHOLE FOODS MKT Quote

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Big Lots Inc. (NYSE:BIG) has an Earnings ESP of +4.35% and a Zacks Rank #2 (Buy).

Expedia Inc. (NASDAQ:EXPE) has an Earnings ESP of +17.07% and a Zacks Rank #3 (Hold).

GameStop Corp. (NYSE:GME) has an Earnings ESP of +17.86% and a Zacks Rank #3.