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Sprouts Farmers Hits 52-Week High: What Should be Your Move?
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Sprouts Farmers Market, Inc. (SFM - Free Report) shares hit a 52-week high of $114.03 during Friday’s session before closing at $112.90. With the stock at its peak, investors are contemplating whether to cash in gains and make fresh investments or maintain their current stake.
In the past year, SFM shares have rallied 165% compared with the broader industry and the S&P 500’s 76.9% and 32.4% growth, reflecting its successful strategy of focusing on product innovation, emphasis on e-commerce, expanding private label offerings and targeted marketing with everyday great pricing.
Image Source: Zacks Investment Research
Sprouts Farmers’ Growth Drivers
Sprouts Farmers has capitalized on the rising demand for healthy, organic and natural products, aligning with the evolving consumer shift toward wellness and sustainability. The company expects the number of health-conscious consumers to grow even further in the future, allowing SFM to strengthen its market position.
SFM has concentrated on enhancing stock levels, launching innovative products with health-focused attributes, getting the right assortment for local markets and adjusting planograms. These efforts have led to better performance in its stores, while also supporting consistent e-commerce growth. It has been lowering operational complexity, optimizing production and improving in-stock position.
The company continues to innovate within its product assortment, particularly through SFM’s private label, Sprouts brand, which contributed 22% to total sales in the second quarter of 2024. The launch of more than 200 new Sprouts brand items in the quarter highlights the company's ability to quickly adapt to consumer trends and preferences. Cumulatively, these initiatives are likely to drive sales.
Sprouts Farmers has been advancing its customer engagement strategies by fostering a robust omnichannel experience. Through key partnerships with Uber Eats, DoorDash and Instacart, the company is expanding its digital footprint and accelerating e-commerce growth. Notably, the second quarter of 2024 witnessed a remarkable 30% surge in e-commerce sales, constituting 14% of total sales.
SFM Leverages Strong Liquidity
Sprouts Farmers maintains a healthy financial position with cash and cash equivalents amounting to $177.3 million, as of June 30, 2024. This substantial cash reserve appears more than adequate to address its long-term debt and finance-lease obligations totaling $8.1 million. The company generated $311.3 million in operating cash flow year to date through June 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 the company’s outstanding revolver debt and return $104 million to its shareholders through share repurchases.
SFM’s Upbeat Outlook
For the third quarter of 2024, SFM projects comparable store sales growth between 3.5-4.5% and adjusted earnings per share in the range of 71 cents to 75 cents. For 2024, the company anticipates total sales growth between 9% and 10%, with comparable store sales growth expected to range from 4% to 5%. It foresees adjusted earnings per share in the band of $3.29 to $3.37 for 2024.
How is Zacks Consensus Estimate Faring for SFM?
Reflecting the positive sentiment around SFM, the Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 60 days, analysts have increased their estimates for the current and the next fiscal years by 1.2% to $3.37 and 1.4% to $3.69 per share, respectively. These estimates indicate year-over-year growth rates of 18.7% and 9.4%, respectively.
Image Source: Zacks Investment Research
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
SFM Stock Valuation
From a valuation perspective, Sprouts Farmers looks stretched. SFM’s forward 12-month price-to-earnings ratio stands at 31.25, higher than the industry’s ratio of 18.48X. While the P/E ratio is elevated, this reflects the market's confidence in the company’s aggressive expansion into new markets and its product innovation.
Image Source: Zacks Investment Research
What Should be Your Move on SFM?
Sprouts Farmers remains focused on redefining strategies and upgrading capabilities to stay ahead of the curve. The company’s stock price has shown a bullish run on the bourses in the past year. This impressive performance underscores the company's successful focus on natural and organic products, coupled with effective operational strategies and substantial investments in e-commerce. For investors seeking a resilient and growth-oriented stock, SFM may just be the right candidate for investment. Sprouts Farmers currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Here, we have highlighted three other top-ranked stocks, namely The Kroger Co. (KR - Free Report) , Flowers Foods, Inc. (FLO - Free Report) and McCormick & Company, Incorporated (MKC - Free Report) .
KR has a trailing four-quarter earnings surprise of nearly 8.2%, on average. The Zacks Consensus Estimate for Kroger’s current quarter’s sales and earnings indicates growth of 1% and 3.2%, respectively, from the year-ago reported numbers.
Flowers Foods produces and markets packaged bakery food products in the United States, and currently carries a Zacks Rank #2. FLO delivered an earnings surprise of 2% in the last reported quarter.
The Zacks Consensus Estimate for Flowers Foods’ current financial year’s sales and earnings implies growth of 1% and 5%, respectively, from the year-ago reported numbers.
McCormick & Company manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorful products to the food industry, and currently carries a Zacks Rank #2. MKC has a trailing four-quarter earnings surprise of around 13.8%, on average.
The Zacks Consensus Estimate for McCormick & Company’s current financial year’s sales and earnings suggests a rise of 0.6% and 7.8%, respectively, from the year-earlier reported figures.
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Sprouts Farmers Hits 52-Week High: What Should be Your Move?
Sprouts Farmers Market, Inc. (SFM - Free Report) shares hit a 52-week high of $114.03 during Friday’s session before closing at $112.90. With the stock at its peak, investors are contemplating whether to cash in gains and make fresh investments or maintain their current stake.
In the past year, SFM shares have rallied 165% compared with the broader industry and the S&P 500’s 76.9% and 32.4% growth, reflecting its successful strategy of focusing on product innovation, emphasis on e-commerce, expanding private label offerings and targeted marketing with everyday great pricing.
Image Source: Zacks Investment Research
Sprouts Farmers’ Growth Drivers
Sprouts Farmers has capitalized on the rising demand for healthy, organic and natural products, aligning with the evolving consumer shift toward wellness and sustainability. The company expects the number of health-conscious consumers to grow even further in the future, allowing SFM to strengthen its market position.
SFM has concentrated on enhancing stock levels, launching innovative products with health-focused attributes, getting the right assortment for local markets and adjusting planograms. These efforts have led to better performance in its stores, while also supporting consistent e-commerce growth. It has been lowering operational complexity, optimizing production and improving in-stock position.
The company continues to innovate within its product assortment, particularly through SFM’s private label, Sprouts brand, which contributed 22% to total sales in the second quarter of 2024. The launch of more than 200 new Sprouts brand items in the quarter highlights the company's ability to quickly adapt to consumer trends and preferences. Cumulatively, these initiatives are likely to drive sales.
Sprouts Farmers has been advancing its customer engagement strategies by fostering a robust omnichannel experience. Through key partnerships with Uber Eats, DoorDash and Instacart, the company is expanding its digital footprint and accelerating e-commerce growth. Notably, the second quarter of 2024 witnessed a remarkable 30% surge in e-commerce sales, constituting 14% of total sales.
SFM Leverages Strong Liquidity
Sprouts Farmers maintains a healthy financial position with cash and cash equivalents amounting to $177.3 million, as of June 30, 2024. This substantial cash reserve appears more than adequate to address its long-term debt and finance-lease obligations totaling $8.1 million. The company generated $311.3 million in operating cash flow year to date through June 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 the company’s outstanding revolver debt and return $104 million to its shareholders through share repurchases.
SFM’s Upbeat Outlook
For the third quarter of 2024, SFM projects comparable store sales growth between 3.5-4.5% and adjusted earnings per share in the range of 71 cents to 75 cents. For 2024, the company anticipates total sales growth between 9% and 10%, with comparable store sales growth expected to range from 4% to 5%. It foresees adjusted earnings per share in the band of $3.29 to $3.37 for 2024.
How is Zacks Consensus Estimate Faring for SFM?
Reflecting the positive sentiment around SFM, the Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 60 days, analysts have increased their estimates for the current and the next fiscal years by 1.2% to $3.37 and 1.4% to $3.69 per share, respectively. These estimates indicate year-over-year growth rates of 18.7% and 9.4%, respectively.
Image Source: Zacks Investment Research
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
SFM Stock Valuation
From a valuation perspective, Sprouts Farmers looks stretched. SFM’s forward 12-month price-to-earnings ratio stands at 31.25, higher than the industry’s ratio of 18.48X. While the P/E ratio is elevated, this reflects the market's confidence in the company’s aggressive expansion into new markets and its product innovation.
Image Source: Zacks Investment Research
What Should be Your Move on SFM?
Sprouts Farmers remains focused on redefining strategies and upgrading capabilities to stay ahead of the curve. The company’s stock price has shown a bullish run on the bourses in the past year. This impressive performance underscores the company's successful focus on natural and organic products, coupled with effective operational strategies and substantial investments in e-commerce. For investors seeking a resilient and growth-oriented stock, SFM may just be the right candidate for investment. Sprouts Farmers currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Here, we have highlighted three other top-ranked stocks, namely The Kroger Co. (KR - Free Report) , Flowers Foods, Inc. (FLO - Free Report) and McCormick & Company, Incorporated (MKC - Free Report) .
Kroger operates as a food and drug retailer in the United States and currently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
KR has a trailing four-quarter earnings surprise of nearly 8.2%, on average. The Zacks Consensus Estimate for Kroger’s current quarter’s sales and earnings indicates growth of 1% and 3.2%, respectively, from the year-ago reported numbers.
Flowers Foods produces and markets packaged bakery food products in the United States, and currently carries a Zacks Rank #2. FLO delivered an earnings surprise of 2% in the last reported quarter.
The Zacks Consensus Estimate for Flowers Foods’ current financial year’s sales and earnings implies growth of 1% and 5%, respectively, from the year-ago reported numbers.
McCormick & Company manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorful products to the food industry, and currently carries a Zacks Rank #2. MKC has a trailing four-quarter earnings surprise of around 13.8%, on average.
The Zacks Consensus Estimate for McCormick & Company’s current financial year’s sales and earnings suggests a rise of 0.6% and 7.8%, respectively, from the year-earlier reported figures.