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Sprouts Farmers Trades Near 52-week High: Should You Buy SFM?
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Shares of Sprouts Farmers Market, Inc. (SFM - Free Report) have been showing strong momentum, hovering close to its 52-week high of $107.90 achieved last Monday. With the stock closing at $105.70 on Friday, it remains just 2% below that peak. Moreover, the current price level represents an impressive 165% gain from its 52-week low of $39.76 touched last Oct. 2023, highlighting a robust rally in the stock.
SFM has seen a remarkable 69.5% rise in the past six months, outpacing the industry's growth of 24.9% during the same period. The company’s focus on product innovation, emphasis on e-commerce, expansion of private label offerings, and targeted marketing with everyday great pricing has helped it outperform the broader sector and the S&P 500 index, which grew 8.3% and 10.2%, respectively, during the same period.
Image Source: Zacks Investment Research
Technical indicators are also supportive of Sprouts Farmers’ strong performance. The stock is trading above both its 50-day and 200-day moving averages, indicating a robust upward momentum and price stability. This moving average is an important indicator for gauging market trends and momentum.
Image Source: Zacks Investment Research
Sprouts Farmers Stock’s Strategic Growth Driven by Innovation
Sprouts Farmers has successfully expanded its presence in the natural organic space capitalizing on the growing demand in this segment. The company has been providing hassle-free shopping through the Sprouts.com website and mobile app. Additionally, SFM has optimized its supply chain to ensure the freshest produce and is updating its store prototypes to improve the in-store experience. The company is trying all means to provide ready-to-eat, ready-to-heat and ready-to-cook items to customers.
Sprouts Farmers Market's private label, the Sprouts brand, contributed 22% to total sales in the second quarter of 2024 by continuously innovating its product assortment. The launch of over 200 new Sprouts brand items during the quarter highlights the company's ability to quickly adapt to consumer trends and preferences.
Operational & Digital Efficiency Boosts SFM’s Competitiveness
Sprouts Farmers Market has been focused on improving operational efficiencies. To achieve this, the company has implemented fresh item management technology, which helps alleviate operational complexity, optimize production, enhance in-stock positions, reduce shrink, and drive incremental sales.
Sprouts Farmers Market has embraced digital transformation to enhance its customer experience. Partnerships with Uber Eats, DoorDash, and Instacart have expanded its digital footprint and accelerated e-commerce growth. The second quarter of 2024 witnessed a remarkable 30% surge in e-commerce sales, constituting 14% of total sales.
To ensure efficiency and accessibility, approximately 85% of Sprouts stores are situated within 250 miles of a distribution center. The company is also rolling out a new store format designed to maximize selling space per square foot while reducing construction costs. This led to open five new stores in the second quarter of 2024 thus taking the total count to 419 stores. The above-mentioned initiatives are in line with Sprouts' overarching objective of achieving an annual unit growth rate of 10%.
SFM Stock’s Financial Strength and Promising Outlook
Sprouts Farmer's second-quarter financials highlight its strong fiscal health and prudent capital management. As of June 30, 2024, the company held $177.3 million in cash and cash equivalents, along with $8.1 million in long-term debt and finance lease obligations, demonstrating a solid liquidity position.
SFM is well-positioned for sales growth between 9% and 10%, with comparable store sales growth expected to range from 4% to 5%. The company anticipates the gross margin to improve in the second half, in line with the first-half margin expansion, reflecting continued operational efficiency and effective cost management. This outlook, combined with Sprouts' commitment to strategic investments and market expansion, reinforces confidence in its ability to deliver sustained earnings growth.
Estimates for SFM Stock: What’s on the Horizon?
Reflecting the positive sentiment around Sprouts Farmer, the Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 60 days, analysts have increased their estimates for the current and next fiscal year by 8% to $3.37 and by 9.8% to $3.69 per share, respectively. These estimates indicate expected year-over-year growth rates of around 9.6% and 8.9%, respectively.
Image Source: Zacks Investment Research
Final Thought
Investors should consider Sprouts Farmers Market stock due to its strategic focus on growth and innovation, as well as its commitment to operational efficiency and digital initiatives. Buoyed by these efforts, the company is well-poised to achieve its long-term growth objectives. SFM stock is performing strongly in the market, currently sporting a Zacks Rank #1 (Strong Buy), indicating significant potential for continued appreciation.
Three Other Picks You Can't-Miss
We have highlighted three other top-ranked stocks in the broader sector, namely The Chef’s Warehouse (CHEF - Free Report) , Ingredion Incorporated (INGR - Free Report) and McCormick (MKC - Free Report) .
CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
McCormick is a leading manufacturer, marketer, and distributor of spices, seasonings, specialty foods, and flavors. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for McCormick & Company’s current fiscal-year sales and earnings indicates advancements of 0.1% and 5.6%, respectively, from the year-ago reported figures. MKC has a trailing four-quarter earnings surprise of 8.3%, on average.
Ingredion Incorporated, which manufactures and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, currently carries a Zacks Rank #2. INGR has a trailing four-quarter earnings surprise of nearly 11%, on average.
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Sprouts Farmers Trades Near 52-week High: Should You Buy SFM?
Shares of Sprouts Farmers Market, Inc. (SFM - Free Report) have been showing strong momentum, hovering close to its 52-week high of $107.90 achieved last Monday. With the stock closing at $105.70 on Friday, it remains just 2% below that peak. Moreover, the current price level represents an impressive 165% gain from its 52-week low of $39.76 touched last Oct. 2023, highlighting a robust rally in the stock.
SFM has seen a remarkable 69.5% rise in the past six months, outpacing the industry's growth of 24.9% during the same period. The company’s focus on product innovation, emphasis on e-commerce, expansion of private label offerings, and targeted marketing with everyday great pricing has helped it outperform the broader sector and the S&P 500 index, which grew 8.3% and 10.2%, respectively, during the same period.
Image Source: Zacks Investment Research
Technical indicators are also supportive of Sprouts Farmers’ strong performance. The stock is trading above both its 50-day and 200-day moving averages, indicating a robust upward momentum and price stability. This moving average is an important indicator for gauging market trends and momentum.
Image Source: Zacks Investment Research
Sprouts Farmers Stock’s Strategic Growth Driven by Innovation
Sprouts Farmers has successfully expanded its presence in the natural organic space capitalizing on the growing demand in this segment. The company has been providing hassle-free shopping through the Sprouts.com website and mobile app. Additionally, SFM has optimized its supply chain to ensure the freshest produce and is updating its store prototypes to improve the in-store experience. The company is trying all means to provide ready-to-eat, ready-to-heat and ready-to-cook items to customers.
Sprouts Farmers Market's private label, the Sprouts brand, contributed 22% to total sales in the second quarter of 2024 by continuously innovating its product assortment. The launch of over 200 new Sprouts brand items during the quarter highlights the company's ability to quickly adapt to consumer trends and preferences.
Operational & Digital Efficiency Boosts SFM’s Competitiveness
Sprouts Farmers Market has been focused on improving operational efficiencies. To achieve this, the company has implemented fresh item management technology, which helps alleviate operational complexity, optimize production, enhance in-stock positions, reduce shrink, and drive incremental sales.
Sprouts Farmers Market has embraced digital transformation to enhance its customer experience. Partnerships with Uber Eats, DoorDash, and Instacart have expanded its digital footprint and accelerated e-commerce growth. The second quarter of 2024 witnessed a remarkable 30% surge in e-commerce sales, constituting 14% of total sales.
To ensure efficiency and accessibility, approximately 85% of Sprouts stores are situated within 250 miles of a distribution center. The company is also rolling out a new store format designed to maximize selling space per square foot while reducing construction costs. This led to open five new stores in the second quarter of 2024 thus taking the total count to 419 stores. The above-mentioned initiatives are in line with Sprouts' overarching objective of achieving an annual unit growth rate of 10%.
SFM Stock’s Financial Strength and Promising Outlook
Sprouts Farmer's second-quarter financials highlight its strong fiscal health and prudent capital management. As of June 30, 2024, the company held $177.3 million in cash and cash equivalents, along with $8.1 million in long-term debt and finance lease obligations, demonstrating a solid liquidity position.
SFM is well-positioned for sales growth between 9% and 10%, with comparable store sales growth expected to range from 4% to 5%. The company anticipates the gross margin to improve in the second half, in line with the first-half margin expansion, reflecting continued operational efficiency and effective cost management. This outlook, combined with Sprouts' commitment to strategic investments and market expansion, reinforces confidence in its ability to deliver sustained earnings growth.
Estimates for SFM Stock: What’s on the Horizon?
Reflecting the positive sentiment around Sprouts Farmer, the Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 60 days, analysts have increased their estimates for the current and next fiscal year by 8% to $3.37 and by 9.8% to $3.69 per share, respectively. These estimates indicate expected year-over-year growth rates of around 9.6% and 8.9%, respectively.
Image Source: Zacks Investment Research
Final Thought
Investors should consider Sprouts Farmers Market stock due to its strategic focus on growth and innovation, as well as its commitment to operational efficiency and digital initiatives. Buoyed by these efforts, the company is well-poised to achieve its long-term growth objectives. SFM stock is performing strongly in the market, currently sporting a Zacks Rank #1 (Strong Buy), indicating significant potential for continued appreciation.
Three Other Picks You Can't-Miss
We have highlighted three other top-ranked stocks in the broader sector, namely The Chef’s Warehouse (CHEF - Free Report) , Ingredion Incorporated (INGR - Free Report) and McCormick (MKC - Free Report) .
The Chef’s Warehouse, which engages in the distribution of specialty food products, currently sports a Zacks Rank #1 .You can see the complete list of today’s Zacks #1 Rank stocks here.
CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
McCormick is a leading manufacturer, marketer, and distributor of spices, seasonings, specialty foods, and flavors. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for McCormick & Company’s current fiscal-year sales and earnings indicates advancements of 0.1% and 5.6%, respectively, from the year-ago reported figures. MKC has a trailing four-quarter earnings surprise of 8.3%, on average.
Ingredion Incorporated, which manufactures and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, currently carries a Zacks Rank #2. INGR has a trailing four-quarter earnings surprise of nearly 11%, on average.