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Whole Foods (WFMI) dropped 14% yesterday on lousy same-store sales results. The stock hit a four-year low.

For the quarter ended April 13, Whole Foods reported comparable-store sales -- or sales at stores open at least one year -- increased 6.7% from a year-earlier.

In a research note, Citigroup analyst Gregory Badishkanian said investors probably expected Whole Foods to report comparable-store sales growth of between 8% and 9%.

In recent years, Whole Foods had grown its comparable-store sales at rates in the high single digits to low double digits. But analysts said it looks like that growth is easing as the company rebrands Wild Oats stores acquired last August and opens new stores.

This latest bombshell comes less than a year after it was revealed that John Mackey was posting on the Yahoo message boards.

In late 2005, I first called out Whole Foods' outlandish valuation:

I’m a big fan of Whole Food Market (WFMI), but this stock is way, WAY over-priced. Last quarter, the company missed earnings by a penny a share. In the past few weeks, Wall Street has lowered this fiscal year’s consensus earnings estimate to $2.86 a share, and the stock is still trading at 53 times that. That’s almost as much as Google (GOOG)!

Look, I like organic kumquats as much as the next guy, but let’s be reasonable. Whole Foods’ earnings will probably grow by about 17%-20%. Not bad at all. The stock, however, is already up over 60% this year.

A stock can’t go up faster than its earnings indefinitely. At some point, something’s gotta give. That’s not finance, it’s physics. Right now, the stock is going up because it’s going up. The price and fundamentals have politely parted company. On Friday, shares of Whole Foods closed at another all-time high.

Posted by edelfenbein at May 15, 2008 10:15 AM