We highlighted three months ago that Whole Foods appeared significantly undervalued and the stock has since shot up 26%. The first catalyst that drove shares higher was when Jana Partners disclosed that it had taken an 8% stake in the company on April 10th.
Shares now appear fundamentally overvalued relative to its peer group. The stock also appears overvalued when inputting Wall Street projections into various discounted cash flow (DCF) analyses and dividend discount models.
Value investors may want to stay clear of the stock prior to earnings expected Wednesday.