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The Zacks Analyst Blog Highlights: Walt Disney, Whole Foods Market, Sprouts Fresh Market, Kroger and Wal-Mart

Zacks Equity Research

For Immediate Release
Chicago, IL – May 07, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Walt Disney Company (DIS-Free Report), Whole Foods Market (WFM-Free Report), Sprouts Fresh Market (SFM-Free Report), Kroger (KR-Free Report) and Wal-Mart (WMT-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday’s Analyst Blog:

Disney Crushes Estimates on ‘Frozen’ Winter
When a firm like The Walt Disney Company (DIS-Free Report) reports earnings, there's usually very little stealth about it. After the bell Tuesday, Disney obliterated already upwardly revised estimates on both the top and bottom lines: earnings of $1.11 per share easily beat the Zacks Consensus Estimate of 97 cents, on revenues of $11.65 billion which beat the $11.22 billion expected. And everyone knows why: the incredible success of the animated film Frozen.
The G-rated winter-themed musical film is now the highest grossing animated movie of all time, having crossed the $1 billion plateau weeks ago. This helped the Studio segment of Disney's enterprise bring in $1.8 billion in the company's fiscal Q2 (Frozen was released in late 2013). Disney's Parks and Resorts brought in $3.56 billion, and Media and Networks took in $1.53 billion in the quarter.
Analysts had been expecting big things from the company: earnings estimate revisions have had a strong upward bias over the past 60 days, helping tick up the consensus for this quarter, next quarter, fiscal 2014 and 2015. It's Disney's third straight positive earnings surprise in a row, and by far the biggest of the bunch. Prior to the earnings report, Disney carried a Zacks Rank #2 (Buy).
Even the relatively beleaguered Interactive segment operating results went from a loss of $54 million to a gain of $14 million. In short, this is a company firing on all cylinders right now. Disney stock is up slightly following the earnings announcement in the after-market after trading down slightly in a down day for the regular market. But the company is still within range of its 52-week -- and all-time -- highs, and this good-news quarter may push past $83.65, especially considering Disney's P/E is 22x earnings. Compare that with some of the sluggishly growing growth stocks reporting much weaker numbers this quarter.
Of course, time will tell if Disney can recreate the immense success of a film like Frozen in the upcoming summer blockbuster season. But investors of Disney have got to like the view from here regardless. It's funny -- Walt Disney himself might not actually be frozen (contrary to popular myth), but the company he founded sure is -- and loving every minute of it.

Whole Foods Earnings Numbers Decay

Whole Foods Market (WFM-Free Report), reported earnings after the bell today, posting an EPS of $0.38, and Revenues of $3.32 billion.  These numbers came in below both the Zacks Consensus Earnings Estimate of $0.41, and Zacks Consensus Revenues Estimate of $3.346 billion.  

Whole Foods used to be the only game in town if you wanted organic and natural food options, but recently, competition has grown.  Sprouts Fresh Market (SFM-Free Report), IPO’d in August of 2013, Kroger (KR-Free Report) has expanded their organic and natural food options, and Wal-Mart (WMT-Free Report) just announced that they would carry Wild Oats organic foods in over 2,000 stores.  Moreover, Wal-Mart stated that they would sell their Wild Oats products at 25% less than other stores offer the same items.  The organic foods segment is now being saturated with increased competition.  

With competition increasing, and Whole Foods trading at 31 times forward earnings, this was a make or break quarter for the company.  And with this miss, on both the top and bottom lines, investors are worried about the future growth of the company.  Furthermore, analysts were expecting Comp Store Sales (stores open for a year or more) to grow at a rate of 5.2%, but the actual numbers came in at 4.5%. 

These earnings numbers sent the stock price tumbling in afterhours trading; Whole Foods is down more than 10% on heavy volume. 

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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