Sprouts Farmers (SFM) AI Stock Analysis

• Market Cap: $16.80B
• Dividend Yield: N/A
• Average Volume (3M): 1.67M
• Price to Earnings (P/E): 45.7
• Beta (1Y): 0.44
• Revenue Growth: 15.51%
• EPS Growth: 53.77%
• Country: US
• Employees: 35,000
• Sector: Consumer Defensive
• Sector Strength: 82
• Industry: Grocery Stores
• EPS (TTM): 3.75
• Shares Outstanding: 97,858,620
• 10 Day Avg. Volume: 1,614,430
• 30 Day Avg. Volume: 1,668,662
• PEG Ratio: 0.91
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.86
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 4.89
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $181.85
• Price Target Upside: 4.55% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14

Sprouts Farmers Market shows strong financial performance with significant revenue and earnings growth, supported by effective cost management and a successful strategy. The technical analysis indicates upward momentum, albeit with caution due to overbought conditions. While the high P/E ratio suggests some overvaluation, the positive earnings guidance and strategic initiatives like the loyalty program and e-commerce expansion further bolster the stock's potential. The company's moderate leverage and lack of dividend yield may be minor concerns, but overall, Sprouts is well-positioned for continued growth in the grocery store industry.

Positive Factors

Customer Base Growth

The company sees continued growth in its customer base supported by assortment enhancements, geographic expansion, and marketing efforts.

E-commerce Expansion

SFM has significant runway for store growth and geographic expansion and the ability to reach new customers through its growing e-commerce business.

Financial Performance

Sprouts Farmers Market's sales and margin strength continues, leading to an analyst recommendation to raise the price objective to $200.

Negative Factors

Consumer Sentiment

Sales/margin risk if consumer sentiment worsens and price investments are needed to stimulate traffic, especially as price gaps for SFM have widened.

Market Expectations

Key bear concerns include tough compares and high expectations given SFM's impressive track record of sales/EPS upside.

Valuation Concerns

Compares get much tougher in the back half of the year and valuation is high, with the stock already trading at 30x the bull case.

Sprouts Farmers Business Overview & Revenue Model

Company Description

Sprouts Farmers Market, Inc. offers fresh, natural, and organic food products in the United States. The company offers perishable product categories, including fresh produce, meat, seafood, deli, bakery, floral and dairy, and dairy alternatives; and non-perishable product categories, such as grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care. As of January 2, 2022, it operated 374 stores in 23 states. Sprouts Farmers Market, Inc. was founded in 2002 and is headquartered in Phoenix, Arizona.

How the Company Makes Money

Sprouts 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 shows strong revenue growth with a TTM revenue of $8.07 billion, up from $7.72 billion in the previous year, marking a revenue growth rate of 4.55%. The gross profit margin is robust at 38.06%, indicating effective cost management. The net profit margin has improved to 5.53% TTM, reflecting enhanced profitability. EBIT margin stands at 7.26% and EBITDA margin at 8.95% TTM, both showcasing efficient operations. Overall, Sprouts Farmers demonstrates a solid financial performance across all verticals, with notable revenue growth, profitability, and efficient cash flow management. While the company's leverage is moderate, its strong ROE and cash flow ratios indicate robust overall health. Continued focus on improving the equity base could enhance financial stability further.

Income Statement

Sprouts Farmers shows strong revenue growth with a TTM revenue of $8.07 billion, up from $7.72 billion in the previous year, marking a revenue growth rate of 4.55%. The gross profit margin is robust at 38.06%, indicating effective cost management. The net profit margin has improved to 5.53% TTM, reflecting enhanced profitability. EBIT margin stands at 7.26% and EBITDA margin at 8.95% TTM, both showcasing efficient operations. Overall, the income statement reflects a healthy growth trajectory with solid profitability metrics.

Balance Sheet

The company maintains a balanced financial structure with a debt-to-equity ratio of 1.33, indicating moderate leverage. Return on Equity (ROE) is strong at 34.67% TTM, demonstrating effective use of equity to generate profits. The equity ratio is 34.45%, suggesting a stable financial foundation. While the leverage is moderate, there is an opportunity to improve the equity base for greater stability.

Cash Flow

Sprouts Farmers' cash flow analysis reveals a positive trend with a free cash flow growth rate of 17.15% TTM. The operating cash flow to net income ratio is favorable at 1.62, indicating good cash generation relative to profit. The free cash flow to net income ratio is 1.09, showing effective conversion of profits into free cash flow. The company maintains strong cash flow management, supporting its operational and financial commitments.

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

• Technical Analysis Sentiment: Positive
• Last Price: 173.93
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SFM, the sentiment is Positive. The current price of 173.93 is above the 20-day moving average (MA) of 161.10, above the 50-day MA of 150.92, and above the 200-day MA of 131.68, indicating a bullish trend. The MACD of 6.06 indicates Negative momentum. The RSI at 71.47 is Negative, neither overbought nor oversold. The STOCH value of 82.32 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SFM.

Sprouts Farmers Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KR	73 Outperform	$47.70B	19.65	26.59%	1.73%	-1.94%	23.94%
SFM	72 Outperform	$16.80B	45.72	35.74%	―	15.51%	53.77%
NGVC	72 Outperform	$1.16B	32.31	21.52%	0.87%	9.31%	35.37%
ACI	71 Outperform	$12.28B	11.91	31.26%	2.45%	1.46%	-26.54%
IMKTA	67 Neutral	$1.15B	14.94	5.15%	1.07%	-7.38%	-57.42%
GO	65 Neutral	$1.62B	41.49	3.27%	―	10.13%	-50.29%
Sector *	64 Neutral	$8.88B	14.97	4.63%	174.27%	3.67%	4.40%

Sprouts Farmers Corporate Events

Sprouts Farmers Reports Strong Q1 2025 Financial Results

Sprouts Farmers Market reported strong financial results for the first quarter of 2025, with net sales reaching $2.2 billion, a 19% increase from the previous year. The company also saw a comparable store sales growth of 11.7% and a significant rise in diluted earnings per share to $1.81. Sprouts opened three new stores, bringing its total to 443 locations, and ended the quarter with $286 million in cash and no debt on its revolving credit facility. The company repurchased 1.6 million shares of common stock and generated $299 million in cash from operations. Looking ahead, Sprouts anticipates continued growth with plans to open at least 35 new stores and achieve net sales growth of 12% to 14% for the full year 2025.

Spark’s Take on SFM Stock

According to Spark, TipRanks’ AI Analyst, SFM is a Outperform.

Sprouts Farmers Market demonstrates strong financial performance, highlighted by excellent revenue growth and solid profit margins. The upward technical momentum supports a positive outlook, though high valuations and overbought technical indicators suggest caution. Positive earnings guidance further strengthens the stock’s potential, despite some operational challenges.

To see Spark’s full report on SFM stock, click here.

Sprouts Farmers Market Reports Strong 2024 Financial Growth

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.