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Here's Why Sprouts Farmers (SFM) Has Rallied 25% in 3 Months
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Sprouts Farmers (SFM - Free Report) has experienced a remarkable surge in its stock price over the past three months. The stock has risen 25.2%, comfortably exceeding the industry’s modest growth of 6.9%.
In the past month, shares of this Phoenix, AZ-based company have risen 18.8%. This impressive run on the bourses can be attributed to Sprouts Farmers’ better-than-expected second-quarter fiscal 2024 results, wherein the top and bottom lines increased year over year. The company's results were favorably impacted by decent comparable sales, positive traffic trends, accelerating unit growth and increasing customer engagement. (Read more: Sprouts Farmers Gains as Q2 Earnings Beat & Comps Impress)
Analysts have raised their expectations following Sprouts Farmers’ stellar performance and an upbeat outlook. The Zacks Consensus Estimate for earnings per share has increased, reflecting the optimistic outlook around SFM.
Over the past 30 days, analysts have increased their estimates for both the current and next fiscal year by 8% and 9.8% to $3.37 and $3.69 per share, respectively. These estimates indicate expected year-over-year growth rates of 18.7% and 9.4%, respectively.
Image Source: Zacks Investment Research
Decoding Tailwinds
Sprouts Farmers is expanding its customer base through product innovation and targeted marketing. In addition to building an efficient supply chain network and modernization of stores, the company is offering hassle-free shopping through the Sprouts.com website and mobile app. The firm is offering goods that are ready to cook, ready to eat, and ready to heat and is constantly revamping its product lineup.
The company’s aggressive expansion plan, which includes the opening of approximately 35 new stores by the end of the year, underscores its confidence in long-term growth. With more than 110 approved new stores and more than 70 executed leases in the pipeline, Sprouts is strategically expanding its footprint across the United States. The focus on opening stores in high-demand markets, coupled with tailored community engagement activities, ensures that each new store resonates with local consumers.
Sprouts Farmers uses technology to improve its efficiency at the operational level. The company has adopted fresh item management technology that lowers operational complexity, maximizes productivity, improves the in-stock position and lowers shrinkage.
Coming to liquidity, Sprouts Farmers has $177.3 million in cash and cash equivalents as of Jun 30, 2024, indicating a sound financial condition. Its cash reserve is sufficient to cover its $8.1 million in long-term debt and finance lease obligations. The company generated $311.3 million in operating cash flow year to date through Jun 30, 2024, allowing it to self-fund $89 million in capital expenditures. This financial discipline also enabled Sprouts to pay down all $125 million of its outstanding revolver debt and return $104 million to shareholders through share repurchases.
Promising Outlook
SFM, which sports a Zacks Rank #1 (Strong Buy), projects net sales growth in fiscal year 2024 to range from 9% to 10%, while comparable store sales growth is anticipated between 4% and 5%. The company guided adjusted earnings before interest and taxes between $445 million and $455 million for 2024. It expects full-year adjusted earnings in the range of $3.29-$3.37 per share, which implies an increase from the $2.84 reported in 2023.
This forecast enhances confidence in Sprouts' ability to sustain earnings growth, highlighting the company's commitment to strategic investments and expanding its market presence.
3 More Picks You Can’t Miss Out On
The Chefs' Warehouse (CHEF - Free Report) is a premier distributor of specialty food products in the United States, the Middle East and Canada. It currently sports a Zacks Rank #1. CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chefs' current financial-year sales and earnings suggests growth of around 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Vital Farms (VITL - Free Report) , which provides pasture-raised products in the United States, currently carries a Zacks Rank #2 (Buy). VITL has a trailing four-quarter earnings surprise of 82.5%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings implies growth of around 26.3% and 88.1%, respectively, from the year-ago reported numbers.
BJ's Wholesale Club (BJ - Free Report) , a leading operator of membership warehouse clubs, currently carries a Zacks Rank #2. BJ has a trailing four-quarter earnings surprise of 4.5%, on average.
The Zacks Consensus Estimate for BJ's Wholesale Club’s current financial-year sales call for growth of around 4.1% from the year-ago reported numbers.
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Here's Why Sprouts Farmers (SFM) Has Rallied 25% in 3 Months
Sprouts Farmers (SFM - Free Report) has experienced a remarkable surge in its stock price over the past three months. The stock has risen 25.2%, comfortably exceeding the industry’s modest growth of 6.9%.
In the past month, shares of this Phoenix, AZ-based company have risen 18.8%. This impressive run on the bourses can be attributed to Sprouts Farmers’ better-than-expected second-quarter fiscal 2024 results, wherein the top and bottom lines increased year over year. The company's results were favorably impacted by decent comparable sales, positive traffic trends, accelerating unit growth and increasing customer engagement. (Read more: Sprouts Farmers Gains as Q2 Earnings Beat & Comps Impress)
Analysts have raised their expectations following Sprouts Farmers’ stellar performance and an upbeat outlook. The Zacks Consensus Estimate for earnings per share has increased, reflecting the optimistic outlook around SFM.
Over the past 30 days, analysts have increased their estimates for both the current and next fiscal year by 8% and 9.8% to $3.37 and $3.69 per share, respectively. These estimates indicate expected year-over-year growth rates of 18.7% and 9.4%, respectively.
Image Source: Zacks Investment Research
Decoding Tailwinds
Sprouts Farmers is expanding its customer base through product innovation and targeted marketing. In addition to building an efficient supply chain network and modernization of stores, the company is offering hassle-free shopping through the Sprouts.com website and mobile app. The firm is offering goods that are ready to cook, ready to eat, and ready to heat and is constantly revamping its product lineup.
The company’s aggressive expansion plan, which includes the opening of approximately 35 new stores by the end of the year, underscores its confidence in long-term growth. With more than 110 approved new stores and more than 70 executed leases in the pipeline, Sprouts is strategically expanding its footprint across the United States. The focus on opening stores in high-demand markets, coupled with tailored community engagement activities, ensures that each new store resonates with local consumers.
Sprouts Farmers uses technology to improve its efficiency at the operational level. The company has adopted fresh item management technology that lowers operational complexity, maximizes productivity, improves the in-stock position and lowers shrinkage.
Coming to liquidity, Sprouts Farmers has $177.3 million in cash and cash equivalents as of Jun 30, 2024, indicating a sound financial condition. Its cash reserve is sufficient to cover its $8.1 million in long-term debt and finance lease obligations. The company generated $311.3 million in operating cash flow year to date through Jun 30, 2024, allowing it to self-fund $89 million in capital expenditures. This financial discipline also enabled Sprouts to pay down all $125 million of its outstanding revolver debt and return $104 million to shareholders through share repurchases.
Promising Outlook
SFM, which sports a Zacks Rank #1 (Strong Buy), projects net sales growth in fiscal year 2024 to range from 9% to 10%, while comparable store sales growth is anticipated between 4% and 5%. The company guided adjusted earnings before interest and taxes between $445 million and $455 million for 2024. It expects full-year adjusted earnings in the range of $3.29-$3.37 per share, which implies an increase from the $2.84 reported in 2023.
This forecast enhances confidence in Sprouts' ability to sustain earnings growth, highlighting the company's commitment to strategic investments and expanding its market presence.
3 More Picks You Can’t Miss Out On
The Chefs' Warehouse (CHEF - Free Report) is a premier distributor of specialty food products in the United States, the Middle East and Canada. It currently sports a Zacks Rank #1. CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chefs' current financial-year sales and earnings suggests growth of around 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Vital Farms (VITL - Free Report) , which provides pasture-raised products in the United States, currently carries a Zacks Rank #2 (Buy). VITL has a trailing four-quarter earnings surprise of 82.5%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings implies growth of around 26.3% and 88.1%, respectively, from the year-ago reported numbers.
BJ's Wholesale Club (BJ - Free Report) , a leading operator of membership warehouse clubs, currently carries a Zacks Rank #2. BJ has a trailing four-quarter earnings surprise of 4.5%, on average.
The Zacks Consensus Estimate for BJ's Wholesale Club’s current financial-year sales call for growth of around 4.1% from the year-ago reported numbers.