As you go through the valuation of Whole Foods, here are questions to consider.
- What is going on at Whole Foods and how does that affect Karen Short?
- What is the case for buy? What assumptions are required to justify a higher valuation?
- What is the case for a sell recommendation? What is the narrative that results in a lower valuation?
- What are some best-practice principles for valuation?
This case is a valuation exercise for us. This case also brings up issues with forecasting and so we can discuss those as well.
When you are answering those questions, some calculations which may help you include
EBITDA Margin: EBITDA/Revenue for all of the firms. You may also wish to evaluate Enterprise value as a multiple of EBITDA. This will make it easy to see the different structures in high end/traditional grocer/supercenter stores.