Reference no: EM133074403

Case 7 - Whole Foods Market: The Deutsche Bank Report   

This case examines the decisions of Deutsche Bank research analyst Karen Short in May 2014 while covering the stock of Whole Foods Market, a leading natural and organic food retailer at the time. Having recently issued a "buy" recommendation for the stock backed by a strong financial forecast, Short must reevaluate her decision in the face of a lower-than-expected earnings announcement by Whole Foods management and an associated market price decline.  Scrutinize Karen Short's financial forecast and consider the developing industry dynamics and Whole Foods' competitive position. Carefully evaluate the appropriateness of Short's current financial forecast using financial statement modeling and sensitivity analysis. 

Produce a substantial and detailed research report (essay) that addresses the following key questions:

1. How would you describe Whole Foods' strategy?
2. How to compared a competitor analysis. How would to define Whole Foods' industry? Who are Whole Foods' competitors?
3. How attractive is Whole Foods' current market position? Is it sustainable?
4. What do the financial ratios in about the past operating performance of Whole Foods? How informative are the historical ratios for Whole Foods' prospective performance?
5. Examine in detail. How important are each of the underlying financial assumptions in the ROA forecast? What assumptions (i.e., margins, asset turnover, growth) play the biggest role in driving the anticipated improvements in ROA?
6. How to agree with the existing financial assumptions in the Deutsche Bank forecast? If so, why? If not, what adjustments would it make to the model? Be prepared to defend the basis of the forecast for Whole Foods' performance.