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Sprouts Farmers (SFM)
NASDAQ:SFM
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Sprouts Farmers
(NASDAQ:SFM)72Outperform
Positive Factors
Earnings
Sprouts Farmers Market posted strong results, beating expectations for Q4 earnings and showing significant growth in comparable store sales.
Sales and Traffic
Sprouts Farmers Market has successfully reset to a higher margin customer base, with sales and traffic trends now outpacing peers.
Negative Factors
Valuation
The valuation of Sprouts Farmers Market is at a 10-year high, which is a concern for some analysts.
Sprouts Farmers (SFM) vs. S&P 500 (SPY)
Market Cap
$14.33B
Dividend YieldN/A
Average Volume (3M)1.67M
Price to Earnings (P/E)38.7
Beta (1Y)0.41
Revenue Growth12.90%
EPS Growth50.20%
CountryUS
Employees32,000
SectorConsumer Defensive
Sector Strength73
IndustryRetailers - Staples
Share Statistics
EPS (TTM)3.75
Shares Outstanding98,585,380
10 Day Avg. Volume2,419,473
30 Day Avg. Volume1,665,486
Financial Highlights & Ratios
PEG Ratio0.77
Price to Book (P/B)N/A
Price to Sales (P/S)1.88
Price to Cash Flow (P/CF)29.00
P/FCF Ratio29.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$173.55Price Target Upside19.40% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
Sprouts Farmers Business Overview & Revenue Model
Company DescriptionSprouts Farmers Markets, Inc. engages in operating healthy grocery stores. It specializes in fresh, natural, and organic products. Its products include fresh produce, bulk foods, vitamins and supplements, grocery, meat and seafood, deli, bakery, dairy, frozen foods, body care, and natural household items. The company was founded by Stan Boney and Shon Alexander Boney on July 11, 2002 and is headquartered in Phoenix, AZ.
How the Company Makes MoneySprouts Farmers Market generates revenue primarily through the sale of natural and organic groceries and related products. The company's revenue model is based on retail sales from its physical store locations across the United States. Sprouts focuses on high-margin categories such as produce, vitamins, and supplements, which contribute significantly to its earnings. Additionally, the company leverages strategic partnerships with suppliers to offer exclusive, high-quality products and maintain competitive pricing. Sprouts' investment in private label products also supports its revenue by providing unique offerings that enhance customer loyalty and improve margins.
Sprouts Farmers Financial Statement Overview
Summary
Sprouts Farmers Market showcases strong financial health with robust revenue growth and profit margins. The balance sheet reflects a solid capital structure with manageable debt levels. Cash flow analysis reveals strong cash generation capabilities, supporting future growth. Overall, the company's financial performance is commendable with a focus on growth and profitability.Income Statement
Sprouts Farmers demonstrates strong revenue growth with a notable increase from $6.84 billion to $7.72 billion, a growth rate of 12.93%. The gross profit margin is healthy at 38.10%, and the net profit margin has improved to 4.93%. The EBIT and EBITDA margins are stable at 6.54%. Continuous revenue growth and improved profitability margins indicate robust financial performance.87
Very Positive
Balance Sheet
The company's debt-to-equity ratio is manageable at 1.27, reflecting a balanced capital structure. Return on Equity (ROE) has improved to 28.79%, demonstrating efficient use of shareholder equity to generate profits. The equity ratio of 36.31% suggests a solid equity base relative to total assets, although slightly lower than desired for greater financial stability.75
Positive
Cash Flow
Operating cash flow has increased significantly, and free cash flow growth is impressive at 73.03%. The operating cash flow to net income ratio of 1.70 indicates strong cash generation relative to net income. The free cash flow to net income ratio of 1.09 reflects the company's ability to maintain positive cash flow after capital expenditures.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 7.72B | 6.84B | 6.40B | 6.10B | 6.47B | Gross Profit |
| 2.94B | 2.52B | 2.35B | 2.21B | 2.38B | EBIT |
| 504.50M | 350.23M | 358.36M | 334.08M | 391.67M | EBITDA |
| 504.50M | 482.12M | 604.76M | 568.13M | 617.45M | Net Income Common Stockholders |
| 380.60M | 258.86M | 261.16M | 244.16M | 287.45M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 265.16M | 201.79M | 293.23M | 245.29M | 169.70M | Total Assets |
| 3.64B | 3.33B | 3.07B | 2.92B | 2.81B | Total Debt |
| 1.68B | 1.66B | 1.54B | 1.51B | 1.47B | Net Debt |
| 1.41B | 1.46B | 1.25B | 1.26B | 1.30B | Total Liabilities |
| 2.32B | 2.18B | 2.02B | 1.96B | 1.93B | Stockholders Equity |
| 1.32B | 1.15B | 1.05B | 959.88M | 881.29M |
| Cash Flow | Free Cash Flow | |||
| 414.84M | 239.76M | 247.32M | 262.42M | 372.07M | Operating Cash Flow |
| 645.21M | 465.07M | 371.33M | 364.80M | 494.04M | Investing Cash Flow |
| -230.38M | -238.34M | -124.01M | -102.38M | -121.97M | Financing Cash Flow |
| -351.50M | -318.05M | -199.13M | -186.86M | -287.41M |
Sprouts Farmers Technical Analysis
Negative
145.35
Price Trends
148.64
Negative
142.04
Positive
116.53
Positive
Market Momentum
-2.11
Positive
42.03
Neutral
23.38
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SFM, the sentiment is Negative. The current price of 145.35 is below the 20-day moving average (MA) of 160.79, below the 50-day MA of 148.64, and above the 200-day MA of 116.53, indicating a neutral trend. The MACD of -2.11 indicates Positive momentum. The RSI at 42.03 is Neutral, neither overbought nor oversold. The STOCH value of 23.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SFM.
Sprouts Farmers Risk Analysis
Sprouts Farmers disclosed 42 risk factors in its most recent earnings report. Sprouts Farmers reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Sprouts Farmers Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $460.27B | 60.89 | 30.98% | 0.44% | 5.35% | 16.22% | |
77 Outperform | $1.98B | 18.01 | 7.60% | 1.87% | 2.00% | 5.89% | |
76 Outperform | $12.19B | 11.83 | 30.82% | 2.42% | 0.97% | -24.43% | |
72 Outperform | $14.33B | 38.71 | 28.79% | ― | 12.90% | 50.20% | |
68 Neutral | $45.51B | 16.64 | 21.45% | 1.99% | 1.41% | 46.58% | |
63 Neutral | $20.85B | 13.27 | -10.88% | 7.48% | 1.13% | 11.50% | |
61 Neutral | $1.12B | 14.54 | <0.01% | 1.09% | -7.38% | -57.42% |
* Consumer Defensive Sector Average
Performance Comparison
SFM
Sprouts Farmers
145.35
82.47
131.15%
COST
Costco
1,036.87
281.06
37.19%
IMKTA
Ingles Markets
60.24
-15.36
-20.32%
KR
Kroger Company
63.18
14.76
30.48%
WMK
Weis Markets
73.60
9.78
15.32%
ACI
Albertsons Companies
19.76
0.02
0.10%
Sprouts Farmers Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -14.40% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
Sprouts Farmers Market showed strong performance with record sales growth, significant e-commerce achievements, and successful new store openings. However, the company faced challenges with increased SG&A expenses and costs associated with store closures. Despite these lowlights, the positive achievements and future growth plans present an optimistic outlook.Highlights
Record Sales Growth
Sprouts Farmers Market reported a 13% increase in sales for 2024, with a 7.6% comparable store sales growth and a margin improvement of more than 70 basis points.
Strong Fourth Quarter Performance
Fourth quarter total sales were $2 billion, up 17.5% from the same period last year, driven by an 11.5% comparable store sales growth.
E-commerce Milestone
E-commerce sales grew approximately 37% in the fourth quarter, representing 14.5% of total sales, surpassing $1 billion for the year.
New Store Openings and Job Creation
Sprouts opened 33 new stores in 2024, adding approximately 3,300 new jobs, and plans to open at least 35 more stores in 2025.
Improved Customer Engagement
The company achieved its highest customer service scores and improved marketing effectiveness, leading to strong traffic and customer growth.
Lowlights
SG&A Deleverage
SG&A expenses increased by $300 million, resulting in a 55 basis points of deleverage, primarily due to higher incentive compensation and increased e-commerce fees.
Store Closure Costs
Store closure and other costs totaled approximately $13 million for the year, mainly due to ongoing occupancy costs from 2023 store closures.
Challenges from Natural Disasters
The company faced operational challenges due to floods in the Carolinas, wildfires in Los Angeles, and an airplane crash near a Philadelphia store.
Company Guidance
During the Sprouts Farmers Market earnings call, the company provided specific guidance for 2025, projecting total sales growth between 10.5% and 12.5%, with comparable store sales expected to range from 4.5% to 6.5%. The company plans to open at least 35 new stores and anticipates adjusted earnings before interest and taxes (EBIT) to be between $590 million and $610 million. Additionally, Sprouts expects adjusted earnings per share (EPS) to be between $4.52 and $4.68, assuming no additional share repurchases. The corporate tax rate is projected to be approximately 25%, and capital expenditures net of landlord reimbursements are expected to range from $230 million to $250 million. The company also highlighted plans for continued gross margin expansion, driven by supply chain efficiencies and reduced shrinkage, alongside a slight leverage in selling, general, and administrative (SG&A) expenses. For the first quarter of 2025, Sprouts expects comp sales growth between 10% and 11%, with adjusted EPS ranging from $1.51 to $1.55.Sprouts Farmers Corporate Events
Business Operations and StrategyFinancial Disclosures
Sprouts Farmers Market Reports Strong 2024 Financial Growth
Positive
Feb 20, 2025
Sprouts Farmers Market reported significant growth for the fourth quarter and the full year ending December 29, 2024, with net sales reaching $2.0 billion for the quarter and $7.7 billion for the year, marking increases of 18% and 13% respectively from the previous year. The company opened 33 new stores in 2024 and ended the year with 440 stores, demonstrating strong operational expansion and financial performance, which positions it well for future growth in 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.