We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Sprouts Farmers Market, Inc. (SFM) Hits Fresh High: Is There Still Room to Run?
Read MoreHide Full Article
Have you been paying attention to shares of Sprouts Farmers (SFM - Free Report) ? Shares have been on the move with the stock up 8.3% over the past month. The stock hit a new 52-week high of $49.55 in the previous session. Sprouts Farmers has gained 1.9% since the start of the year compared to the 26.8% move for the Zacks Retail-Wholesale sector and the 33.6% return for the Zacks Food - Natural Foods Products industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 31, 2023, Sprouts Farmers reported EPS of $0.65 versus consensus estimate of $0.62.
For the current fiscal year, Sprouts Farmers is expected to post earnings of $2.82 per share on $6.83 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $3.02 per share on $7.24 billion in revenues. This represents a year-over-year change of 1.04% and 6.1%, respectively.
Valuation Metrics
Sprouts Farmers may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Sprouts Farmers has a Value Score of A. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 17.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 16.7X. On a trailing cash flow basis, the stock currently trades at 10.3X versus its peer group's average of 10.3X. Additionally, the stock has a PEG ratio of 2.01. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Sprouts Farmers currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Sprouts Farmers passes the test. Thus, it seems as though Sprouts Farmers shares could have potential in the weeks and months to come.
How Does SFM Stack Up to the Competition?
Shares of SFM have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Sovos Brands, Inc. . SOVO has a Zacks Rank of # 1 (Strong Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. Sovos Brands, Inc. beat our consensus estimate by 25%, and for the current fiscal year, SOVO is expected to post earnings of $0.84 per share on revenue of $995.79 million.
Shares of Sovos Brands, Inc. have gained 0.3% over the past month, and currently trade at a forward P/E of 26.15X and a P/CF of 22.11X.
The Food - Natural Foods Products industry is in the top 8% of all the industries we have in our universe, so it looks like there are some nice tailwinds for SFM and SOVO, even beyond their own solid fundamental situation.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Sprouts Farmers Market, Inc. (SFM) Hits Fresh High: Is There Still Room to Run?
Have you been paying attention to shares of Sprouts Farmers (SFM - Free Report) ? Shares have been on the move with the stock up 8.3% over the past month. The stock hit a new 52-week high of $49.55 in the previous session. Sprouts Farmers has gained 1.9% since the start of the year compared to the 26.8% move for the Zacks Retail-Wholesale sector and the 33.6% return for the Zacks Food - Natural Foods Products industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 31, 2023, Sprouts Farmers reported EPS of $0.65 versus consensus estimate of $0.62.
For the current fiscal year, Sprouts Farmers is expected to post earnings of $2.82 per share on $6.83 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $3.02 per share on $7.24 billion in revenues. This represents a year-over-year change of 1.04% and 6.1%, respectively.
Valuation Metrics
Sprouts Farmers may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Sprouts Farmers has a Value Score of A. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 17.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 16.7X. On a trailing cash flow basis, the stock currently trades at 10.3X versus its peer group's average of 10.3X. Additionally, the stock has a PEG ratio of 2.01. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Sprouts Farmers currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Sprouts Farmers passes the test. Thus, it seems as though Sprouts Farmers shares could have potential in the weeks and months to come.
How Does SFM Stack Up to the Competition?
Shares of SFM have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Sovos Brands, Inc. . SOVO has a Zacks Rank of # 1 (Strong Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. Sovos Brands, Inc. beat our consensus estimate by 25%, and for the current fiscal year, SOVO is expected to post earnings of $0.84 per share on revenue of $995.79 million.
Shares of Sovos Brands, Inc. have gained 0.3% over the past month, and currently trade at a forward P/E of 26.15X and a P/CF of 22.11X.
The Food - Natural Foods Products industry is in the top 8% of all the industries we have in our universe, so it looks like there are some nice tailwinds for SFM and SOVO, even beyond their own solid fundamental situation.