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Sprouts Farmers Market, Inc. (SFM) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Sprouts Farmers (SFM - Free Report) ? Shares have been on the move with the stock up 15.6% over the past month. The stock hit a new 52-week high of $103.8 in the previous session. Sprouts Farmers has gained 99.3% since the start of the year compared to the 11.3% move for the Zacks Retail-Wholesale sector and the 29% 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 July 29, 2024, Sprouts Farmers reported EPS of $0.94 versus consensus estimate of $0.77 while it beat the consensus revenue estimate by 3.61%.
For the current fiscal year, Sprouts Farmers is expected to post earnings of $3.22 per share on $7.45 billion in revenues. This represents a 13.38% change in EPS on an 8.97% change in revenues. For the next fiscal year, the company is expected to earn $3.49 per share on $7.99 billion in revenues. This represents a year-over-year change of 8.4% and 7.25%, 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 is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort 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. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Sprouts Farmers has a Value Score of C. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 29.8X current fiscal year EPS estimates, which is a premium to the peer industry average of 15.2X. On a trailing cash flow basis, the stock currently trades at 17.5X versus its peer group's average of 10.6X. Additionally, the stock has a PEG ratio of 3.54. 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 rising earnings estimates.
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 meets the list of requirements. Thus, it seems as though Sprouts Farmers shares could still be poised for more gains ahead.
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Sprouts Farmers Market, Inc. (SFM) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Sprouts Farmers (SFM - Free Report) ? Shares have been on the move with the stock up 15.6% over the past month. The stock hit a new 52-week high of $103.8 in the previous session. Sprouts Farmers has gained 99.3% since the start of the year compared to the 11.3% move for the Zacks Retail-Wholesale sector and the 29% 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 July 29, 2024, Sprouts Farmers reported EPS of $0.94 versus consensus estimate of $0.77 while it beat the consensus revenue estimate by 3.61%.
For the current fiscal year, Sprouts Farmers is expected to post earnings of $3.22 per share on $7.45 billion in revenues. This represents a 13.38% change in EPS on an 8.97% change in revenues. For the next fiscal year, the company is expected to earn $3.49 per share on $7.99 billion in revenues. This represents a year-over-year change of 8.4% and 7.25%, 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 is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort 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. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Sprouts Farmers has a Value Score of C. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 29.8X current fiscal year EPS estimates, which is a premium to the peer industry average of 15.2X. On a trailing cash flow basis, the stock currently trades at 17.5X versus its peer group's average of 10.6X. Additionally, the stock has a PEG ratio of 3.54. 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 rising earnings estimates.
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 meets the list of requirements. Thus, it seems as though Sprouts Farmers shares could still be poised for more gains ahead.