Sprouts Farmers (SFM) AI Stock Analysis

• Market Cap: $6.78B
• Dividend Yield: N/A
• Average Volume (3M): 2.36M
• Price to Earnings (P/E): 13.2
• Beta (1Y): 0.63
• Revenue Growth: 16.60%
• EPS Growth: 49.76%
• Country: US
• Employees: 35,000
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Grocery Stores
• EPS (TTM): 1.22
• Shares Outstanding: 97,369,440
• 10 Day Avg. Volume: 2,864,910
• 30 Day Avg. Volume: 2,360,685
• PEG Ratio: 0.67
• Price to Book (P/B): 9.67
• Price to Sales (P/S): 1.66
• P/FCF Ratio: 30.80
• Enterprise Value/Market Cap: 1.21
• Enterprise Value/Revenue: 0.94
• Enterprise Value/Gross Profit: 2.42
• Enterprise Value/Ebitda: 9.92
• 1Y Price Target: $108.75
• Price Target Upside: 59.67% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 69 Neutral
• Price Target: $78.00 ▲(14.52% Upside)

Sprouts Farmers Market shows strong financial performance and promising growth potential, particularly in earnings and store expansion. However, technical indicators suggest bearish momentum, and valuation metrics indicate moderate attractiveness. The earnings call provided positive insights but also highlighted challenges in consumer demand and competition.

Positive Factors

Margin Improvement & Profitability

Sustained improvement in gross and net margins reflects durable operational efficiency and category mix benefits. Higher margins support reinvestment in stores, loyalty and e-commerce, improving runway for profitable unit growth and cushioning against cyclical top-line swings.

Store Expansion & Growth Pipeline

A large, staged store pipeline provides multi-year organic growth potential and scale economics. Controlled unit growth across markets can expand market share, leverage procurement and distribution, and drive comp sales uplift as new stores mature, supporting durable revenue expansion.

Omnichannel & Private-Label Mix

Rapid e-commerce adoption creates a recurring channel for higher-frequency purchases and customer data, improving lifetime value. Combined with a growing private-label mix, this structural shift can boost margins, deepen customer loyalty and diversify revenue beyond brick-and-mortar.

Negative Factors

High Leverage

Material leverage increases interest and refinancing risk and reduces financial flexibility to fund expansions or weather downturns. High debt levels constrain capital allocation choices, limit resilience to margin shocks, and amplify risk from any sustained sales softness.

Declining Free Cash Flow Growth

Falling FCF growth tightens the company's ability to self-fund new stores, capex and buybacks over time. Persistent declines could force higher borrowing or slower reinvestment, weakening unit economics and slowing long-term expansion unless cash conversion stabilizes.

Competitive & Consumer Softening

Macro and competitive pressure on core consumers risks lower comps and margin compression. In a crowded grocery market, sustained softening reduces pricing power, increases promotional spend and raises the cost of customer acquisition, pressuring long-term profitability.

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 grocery items, including fresh produce, organic products, and health-oriented items. Its key revenue streams include in-store sales from its various product categories, including produce, packaged goods, meat, and dairy. Additionally, Sprouts benefits from its bulk food sections, which often attract cost-conscious consumers. The company also engages in strategic partnerships with local and regional suppliers to enhance its product offerings and promote local agriculture, thereby potentially increasing customer loyalty and foot traffic. Seasonal promotions, loyalty programs, and an emphasis on customer service further contribute to its earnings by fostering repeat business.

Sprouts Farmers Financial Statement Overview

Summary

Sprouts Farmers demonstrates solid financial health with strong revenue and profit growth, efficient operations, and effective equity utilization. However, the high leverage and recent decline in free cash flow growth warrant cautious monitoring.

Income Statement

Sprouts Farmers shows strong revenue growth with a TTM increase of 3.03% and consistent improvement in profit margins. The gross profit margin has improved to 39.06%, and the net profit margin has increased to 5.93%, indicating enhanced profitability. The EBIT and EBITDA margins have also shown positive trends, reflecting operational efficiency.

Balance Sheet

The company's debt-to-equity ratio is relatively high at 1.30, indicating significant leverage, which could pose risks in volatile markets. However, the return on equity is robust at 38.03%, showcasing effective use of equity to generate profits. The equity ratio stands at 35.74%, suggesting a balanced asset structure.

Cash Flow

Operating cash flow remains strong with a coverage ratio of 0.90, but the free cash flow growth has declined by 8.94% in the TTM, which could impact future investments. The free cash flow to net income ratio is healthy at 0.65, indicating good cash generation relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	8.65B	7.72B	6.84B	6.40B	6.10B	6.47B
Gross Profit	3.38B	2.96B	2.54B	2.36B	2.22B	2.39B
EBITDA	823.62M	645.07M	518.59M	493.49M	464.38M	518.17M
Net Income	513.45M	380.60M	258.86M	261.16M	244.16M	287.45M
Balance Sheet
Total Assets	4.01B	3.64B	3.33B	3.07B	2.92B	2.81B
Cash, Cash Equivalents and Short-Term Investments	322.42M	265.16M	201.79M	293.23M	245.29M	169.70M
Total Debt	1.86B	1.68B	1.66B	1.54B	1.51B	1.47B
Total Liabilities	2.58B	2.32B	2.18B	2.02B	1.96B	1.93B
Stockholders Equity	1.43B	1.32B	1.15B	1.05B	959.88M	881.29M
Cash Flow
Free Cash Flow	457.56M	414.84M	239.76M	247.32M	262.42M	372.07M
Operating Cash Flow	702.33M	645.21M	465.07M	371.33M	364.80M	494.04M
Investing Cash Flow	-244.77M	-230.38M	-238.34M	-124.01M	-102.38M	-121.97M
Financing Cash Flow	-443.81M	-351.50M	-318.05M	-199.13M	-186.86M	-287.41M

Sprouts Farmers Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 68.11
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 68.11 is below the 20-day moving average (MA) of 74.37, below the 50-day MA of 78.63, and below the 200-day MA of 124.91, indicating a bearish trend. The MACD of -3.01 indicates Positive momentum. The RSI at 30.08 is Neutral, neither overbought nor oversold. The STOCH value of 15.10 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SFM.

Sprouts Farmers Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NGVC	70 Neutral	$645.85M	14.04	24.02%	1.99%	7.19%	35.90%
SFM	69 Neutral	$6.78B	13.19	36.96%	―	16.60%	49.76%
WMK	67 Neutral	$1.78B	18.91	7.22%	2.06%	3.11%	6.54%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
KR	56 Neutral	$39.91B	57.76	7.75%	2.15%	-1.77%	-70.83%
ACI	56 Neutral	$8.66B	10.86	29.65%	3.49%	2.08%	-1.63%
GO	52 Neutral	$911.69M	-197.69	-0.37%	―	7.22%	-108.99%