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Here's Why You Should Buy Sprout Farmers Stock Right Now
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Sprouts Farmers Market, Inc. (SFM - Free Report) is an appropriate investment option as the company’s shares have outperformed the industry and the overall Consumer Staples sector in the past month. This Zacks Rank #2 (Buy) stock has rallied approximately 45.7% compared with the industry’s growth of 14% and the sector’s rise of 8.6%.
Let’s delve into the factors that make Sprout Farmers a promising bet.
Efforts to Enhance Customers Shopping Experience
In an effort to expand customer base, this Arizona-based company is taking several initiatives. It has launched Sprouts.com website and mobile app in February to help customers experience hassle-free shopping. Moreover, the company has partnered with Instacart to offer same-day delivery to customers. Further, management announced plans to launch more than 200 new items in 2018. The company is trying all means to provide ready-to-eat, ready-to-heat, and ready-to-cook items to customers. Apart from these, Sprout Farmers is trying to expand private-label offerings in departments under the Sprouts Market Corner Deli, The Butcher Shop at Sprouts and Sprouts Fish Market brands.
Store Expansion Initiative
The company is focused on store expansion plans to drive revenues. We note that the company opened seven new outlets during the second quarter of 2018 and four more stores in the third quarter. Currently, the company operates 305 stores in 17 states. Sprout Farmers plans to open 30 stores during 2018. Management is also optimistic about the pipeline, including 50 approved sites and 35 signed leases. These efforts are likely to boost sales and margins.
Impressive Q2 Results
Although the company delivered in line second-quarter 2018 results, both top and bottom lines continued to increase double digits. Higher net sales, lower effective tax rate and fall in shares outstanding drove year-over-year growth. Net sales grew on account of comparable store sales growth of 2% and robust performance at new outlets. Management now expects full year earnings of $1.24-$1.28 per share, up from the earlier guided range of $1.22-$1.28. The company continues to expect net sales growth of 10.5-11.5% and comparable store sales increase of 1.5-2.5%.
Bottom Line
All said, we are optimistic that Sprout Farmers’ growth plans will sustain the company’s stellar show.
McCormick & Company, Incorporated (MKC - Free Report) has a long-term earnings growth rate of 9% and a Zacks Rank #2 (Buy).
Sysco Corporation (SYY - Free Report) has a long-term earnings growth rate of 10.6% and a Zacks Rank #2.
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Here's Why You Should Buy Sprout Farmers Stock Right Now