It depends on what rate they can get. Recall that this sector has very thin margins. Even though WFM has better margins than others, it is still around the 5% to 6% region on average. For debt to work, they need to borrow for less than what their net margin is minus costs to deploy that money.
Another investment I made recently is BBBY which did exactly what you suggest. As a matter of reference, they were able to secure about $1.5b in debt;
$300m @ 3.749% for 10 years
$300m @ 4.915% for 20 years
$900m @ 5.165% for 30 years
Note that both BBBY and WFM have similar market values and similar revenue levels. I assume they will get similar interest rates on debt but I might be wrong. WFM does have growth on its side compared to BBBY but at the same time it does not have anywhere near the same margins. BBBY has a average net margin of around 14% vs. 6.5% at WFM.
Personally, I would just eliminate the useless dividend and use that to fuel expansion and back backs since it is costing them nearly 25% of their net or around $150m. It does not make sense to pay a divvy and dilute as they have the last 10 years. The only people who stand to benefit from this type of action are the execs who just want a bigger company for bigger paychecks no matter the cost. This needs to stop first before they are allowed to incur debt.
Not exactly. Many are franchise restaurants meaning they didn't really pay for them. Someone else did. They do make money from the fees but so did Quiznos and they had around 3000 locations and they went bankrupt. I looked them up also when I was looking to buy a business and I ran quickly the other way when I saw the numbers from one of their franchisees. Do not just look at their prime stores, look at the average smaller stores to make an evaluation. EPL is not doing well. This is why they went public. Check their wiki and it will tell you about all the closings.
So after scouring these threads up to page 5 I find it amazing that no one has mentioned one overwhelming reason why Whole Foods has a strong following, its food court and dining area. I remember when Starbucks took a flush back in 2012 from $60 to $40 for the exact same reasons we see here (margins, competition, scare of slowing growth) and I had to remind folks that SBUX is not really about the coffee. It never was. It is really a lounge service that makes money by selling coffee. I actually believe that Whole Foods is pretty much the same. It is not just about the retail market. Yes that is important just as coffee is still important to SBUX but when folks go to Whole Foods, many times, it is not just about the shopping. They go there with friends and family and actually hang out there with drinks and food. They are willing to spend extra for the enjoyable experience. This is what sets Starbucks aside from old competitors like lame old Winchell, Dunkins, and the disgusting Krispy Kreme. This is also what makes Whole Food unique as none of the other competitors today have anything close. Yea some have a few token benches and seats next to their deli section but it is nothing like Whole Foods and you never see friends say "hey lets go to Vons for a bite to eat." As long as Whole Food attracts that type of client, the price of goods can always remain high just like SBUX can charge $3-$6 for a drink.
I picked up 5800 shares today. Might pick up some options before Wed.
Im still researching but have found nothing so far. I really don't think it matters however. Looking at the technical s and fundamentals, it has almost no downside risk anywhere especially if they make good on their new store openings.
I decided to take a nibble about 15 minutes ago. I managed to pick up 5800 shares at 36.52 average. Couldnt fill the rest before it went up a dime.
Anyone have the most current data on how many stores they have today? I know they project 400 stores by the end of 2014 but they dont really say how many they current have open in the last transcript.
Walmart has a 25 minute line? Maybe on Black Friday but not normal days.
As for the quality thing, I come from a country that only had organic and believe me you dont want to eat that way unless you want to be smaller and weaker than everyone who shops elsewhere. The claims that it is healthier is absolute bologna.
That said, it does not mean that this type of business does now work. People are #$%$. Just look at cigarettes or brand names in general. The general human population is lower than #$%$. You can tell them the truth to their face and they wont care to either verify it or even think about it once they have their minds made up. The only thing they want to hear is reinforcement to what they believe to feel better about themselves. I think the organic farce will be around a long time and WFM is positioned nicely to capitalize. Im still doing my dd but I like what I see.
Anyone have any idea how many new stores are opening this year and next?
I cant verify your facts. Looking at ownership on MStar it looks like it is up about 6mil shares between institutions and funds since March or an increase of 1.6%. According to Etrade they are up 0.44% in ownership just last Friday alone.
Disclaimer: I have no position on WFM. Just doing my dd.
Eh although I like BBBY more and hold BBBY shares, its not fair to compare. PETM is growing faster and their margins are increasing while BBBY margins are definitely under pressure. PETM is also less cyclical and not dependent on any market specifically while BBBY is somewhat dependent on real estate movement which is slow at this time. One thing I like about BBBY however is the rapid buy backs while PETM is still diluting. PETM does offer a nice growing divvy however and their EPS is still growing despite dilution which tells me they are spending it correctly.
In all fairness I would not buy PETM at this time. The price is not attractive to me. BBBY however was a steal in the mid $50. If BBBY can show some nice revenue growth and a slightly improved margin by the next two quarters we should P/E grow to about 15 which will get us to the low $70s easily. I just wish they had a token divvy but thats fine as long as they do buybacks the way they have been.
The only huge blunder as far as I am concerned is healthcare. The other stuff is minor at best and I do think he handled the Ukraine and Syria exactly right by not getting us more involved no matter what it took. Libya was all bs. We should have never been there to begin with and getting attacked in a country that was basically 3rd world is not exactly shocking or news worthy. The folks there knew the risks exactly and were getting paid extremely well for it. Sorry they died but expecting us to spend more money on a country like that is equally asinine and yes, i do believe that there is a financial limit to human life especially that of political workers who do next to nothing useful. Now if it were doctors then I would be upset but they were not. They were there for the money plain and simple. I do feel bad for the military that was there however. I do think obama is a moron for pressing obamacare and for that he gets two thumbs down. I also resent his constant injection into race politics. The president should not be black or white, he is supposed to be above that but that is a minor pr issue that really had no beating on anything. Ultimately Zimmerman was found not guilty so Obama didnt matter and clearly he did not do anything to obstruct the trial else it would have gone another way. I do think it will be nice to see him go.
EPL has been around a very long time... very long time. They were around when we came to the USA back in the 80's. They are not growing fast at all. Many have been closed and many others are always empty. The food is not bad, but it is extremely expensive and portions are very small. Try it sometime. The chicken they get is very small kind of like KFC. Their restaurants are indeed very old (and some dirty) now but given price and portions it really wont matter. Chipotle works because their are about 15% more expensive but portions are about 200%-300% larger. People go there because you get two meals for $6 and they are not bad. $6 buys you a small taco bell size burrito at EPL. Not economical for middle and low middle class customers. It also wont attract upper middle because all of them have Costco memberships.
Negative. Mellinials cannot afford EPL because it is expensive and the portions are very small. My studio is across the street from one in San Diego, want to know how many times my 8 employees (6 of which are under 25) went to eat there? Only once when I took them there for a business lunch. They always go down a block or two to an alternative restaraunt or drive 10 minutes to costco to save $5-$10.
Uh anyone who has a Costco nearby gets bigger and better grilled chicken at 1/2 of the price. The Costco chicken is huge compared to the tiny parts you get a EPL and you get a full chicken for $4.99 that is perfectly grilled and moist. EPL chicken is good but cannot compare to Costco. A full mini chicken at EPL will run you about $10 which is a total rip off.
The burrito you are talking about is #$%$. Sorry but no one in SoCal goes to EPL for a burrito when they have real Mexican restaurants on every corner (some are very very good). The burrito is tasteless and needs to be drowned in salsa to be edible. It is also incredibly expensive at about $5.50 and it tiny. Like their chicken parts, this burrito is almost exactly half the size of any burrito purchased anywhere else for $4-$5. The burritos as Chipotle are probably 3x bigger due to all the filling.
I think the point I am trying to make is that EPL has some serious competition. Anywhere that has Mexican hole in the walls will win over EPL burrito's and tacos. Any place that has a Costco can get a chicken that is twice the size at 1/2 the price of EPL. Anywhere that has a chipotle will also have good burritos at a lower price that is much more filling. This is why, despite being decades old, EPL has completely and utterly failed at mass expansion while all the others are growing like wild weeds. They went public to cash out knowing that they are going no where fast. So go public, increase salaries to execs, make a ton, cash out and move on. Thats not to say there is no potential here but if you go the EPL's around San Diego they are empty 95% of the time for a reason. Some are just nasty due to the quality of workers. If EPL wants to succeed, the first thing that needs to happen is a complete overhaul of its execs. They need to be removed and replaced pronto but that isnt going to happen.
Completely ignoring competition from brick and mortars who already have good distribution. As I explained in a thread earlier, this year I have purchased exactly 1 item from Amazon and it was a iJoy chair for $799 which is a high enough price item that it was worth it to buy it tax free from an out of state seller. In the past, I would have spent thousands on dozens of products on Amazon but they are no longer the price leader and they simply dont run enough specials when I need them. Recently my favorite retailer is Bed Bath and Beyond. They are cheaper because they always have 20% off coupons. Ive spent at least $2k there this year due to moving to a bigger house. For electronics Newegg is almost always cheaper and Frys electronics (as well as Best Buy) match prices. WMT online also offers similar pricing to Amazon. For Video games Steam and GoG has put a ton of pressure on Amazon. For Cameras there is bhphoto which has better prices almost always and will match as needed.
I think that competition is actually Amazons biggest problem. I think Bezos knows this which is why he wants to make his own product and build his brand. Whether or not this works remains to be seen but it is risky.
Oh come on. I doubt even you are that stupid so this must be just another one of those lame shorts who were late to the game. At the very least, if you looked at revenue and revenue growth and margins, its worth about $100 to $150 depending on growth opinion.
Rofl a little history lesson... Apple almost went out of business due to spending under Jobs a long time ago. Thats why he was pushed out. If he had stayed there is a very good chance that would have gone under or gotten bought out long ago before any i-product was ever introduced. Not that Amazon is the same, frankly I think Amazon is overpriced, but still the history is interesting.
Its not about the miss, its about investors losing faith that AMZN will turn a huge profit from these un-retail like investments. You have to remember that Amazon is currently valuated at about 2/3 the value of Walmart but with only 1/7 of the revenue. We already know that Amazon net margins are about the same as Walmart on average due to extra shipping costs. They also cannot increase margins on retail products very much because they are already very efficient compared to brick and mortar. This means that the valuation is based entirely on the idea of revenue growth and margin growth. The growth is indeed much more rapid than WMT however how long will it continue is anyone's guess. Certainly the rate seems to be slowing however all the capital investment being made is a huge glaring unknown. That said, so far, despite these investments growth appears to be slowing which is a bad sign and is probably why investors are nervous.
The question they are asking is what if these capital investments fail? What if revenue is slowing because they are hitting the saturation point on online retail? What if its due to insane competition indicating that pressure will continue indefinitely. As it stands now, I have ordered less than half of what I used to from Amazon in past years because other retailers have picked up the slack and many offer better pricing. Bed Bath & Beyond is currently a favorite especially with the 20% discount on everything making them cheaper than Amazon on pretty much anything they offer. For electronics you cannot beat Newegg. For hardware Amazon always sucked and HD and Lowes both have better pricing. The only things I get from Amazon is video games but even that is under huge pressure thanks to Steam, GoG, and others.
So given all the above, what is a fair valuation? If we assume that Amazon will be going the way of Walmart in 5 years then fair value would be about $100. Obviously this is subjective but you can see why investors are scared.
Old post but I figured I would comment anyway. Resale housing is low. Number of sales has been declining due to very low inventory and extremely high prices. I assume LL is much more tied to real estate than HD and others who are not as specialized in renovations. I dont think LL has major contracts with builders since they can bypass middle men entirely thus new home starts do not help LL.
Any fundamental reason why this should stay above 20 p/e? ive only shopped there once for some laminate and that was 3 years ago. Since then I renovated 3 condos and an office and found that Home Depot was cheaper for both laminate and wood flooring. Of course I get installation elsewhere. Then there is the anemic realty market that is going nowhere due to lack of inventory and high prices.
You do understand that for $18 to happen again you would need 3 things.
#1 complete negative market sentiment towards mREITs which did actually happen mid last year. The problem with sentiment however is that it is short lived and unpredictable and completely unreliable. If you invest based on sentiment alone then you should quit now and open a pizza parlor.
#2 Almost overnight interest rate increase to about 6%. Recall last year we had an overnight increase from low 3% to 4.5% when the feds finally stated they would start to taper. It was investors that pushed the rate up and now it has fallen back to low 4's despite further fed tapering... meaning that 4% is the real actual market rate. To see it jump to 6% overnight would mean that our economy is so strong and people are buying houses and such so fast that we cannot keep up so we need to slow them down instantly. This isn't happening right now. Real estate is anemic.
#3 Margins must be shrinking at the same time as all of the above. But margins are already weak... they really cannot get much worse. It can happen but right now it does not seem likely.
S&P did but the broad market did not. AGNC is up about 12% and the DOW is up about 14% (taking divs into account). Shrug, not a big deal. S&P did better but their P/E is above historic average. Which means it will eventually come down unless earnings grow very very fast while the S&P remains flat. But chances are we are heading into a recession soon so flip a coin, buckle up and take a side.