For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.

Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.

What if you'd invested in Sprouts Farmers (SFM Quick QuoteSFM - Free Report) ten years ago? It may not have been easy to hold on to SFM for all that time, but if you did, how much would your investment be worth today?

Sprouts Farmers' Business In-Depth

With that in mind, let's take a look at Sprouts Farmers' main business drivers.

Sprouts Farmers Market, Inc., which operates in a highly fragmented grocery store industry, has a unique model that features fresh produce, foods section, and a vitamin department focused on overall wellness. Moreover, the company has been diversifying its offerings to meet changing preferences of consumers, who are looking for more health and wellness products. These products are generally plant-based, gluten-free, keto-friendly, and grass-fed. The company has been focusing on natural and organic food, which is one of the fastest growing segments in the industry.

This Phoenix, AZ-based company is an everyday healthy grocery store. As of Jun 30, 2024, the company operates about 419 stores in 23 states. The company classifies products into perishable and non-perishable categories. While perishable product categories (57.3% of 2023 sales mix) include produce, meat, seafood, deli, bakery, floral and dairy and dairy alternatives; non-perishable product categories (42.7% of 2023 sales mix) include grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care.

KeHE Distributors is the company’s main supplier of dry grocery and frozen food products, and accounts for approximately 45% of total purchases in fiscal 2022. Another 3% of total purchases in fiscal 2022, were made through secondary supplier, United Natural Foods Inc. Primary supplier of meat and seafood accounted for approximately 13% of total purchases.

The company's stores are generally located in a variety of mid-sized and larger shopping centers, lifestyle centers and in certain cases, independent single-unit, stand-alone developments.

Bottom Line

Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Sprouts Farmers a decade ago, you're probably feeling pretty good about your investment today.

A $1000 investment made in October 2014 would be worth $4,121.59, or a gain of 312.16%, as of October 28, 2024, according to our calculations. This return excludes dividends but includes price appreciation.

The S&P 500 rose 195.64% and the price of gold increased 114.50% over the same time frame in comparison.

Analysts are anticipating more upside for SFM.

Shares of Sprouts Farmers have increased and outperformed the industry in the past three months. The company’s focus on product innovation, emphasis on e-commerce, expansion of private label offerings and targeted marketing with everyday great pricing bode well. It has been lowering operational complexity, optimizing production, improving in-stock position and updating to smaller format stores. These efforts helped post better-than-expected first-quarter 2024 results, wherein both the top and the bottom lines grew year over year. Buoyed by the performance, the company provided a decent 2024 guidance. We anticipate a 3.2% year-over-year increase in comparable store sales for the year, contributing to an expected net sales growth of 7.7%. However, operating margin remains an area to watch, with challenges expected in the SG&A domain.

The stock is up 10.59% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 1 higher, for fiscal 2024. The consensus estimate has moved up as well.