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Bear of the Day: Sprouts (SFM)

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There is no question that the market has been rallying sharply off the lows. That doesn’t mean that you can jump out in this market and buy anything that moves. You really should make sure that the price movement can be sustained over the long run. What I mean by that is you should check the underlying earnings trend of the stock you are looking at. Stocks with strong earnings trends to the upside tend to outperform over time. Buying into stocks with weak trends just because they’re on the move can be a recipe for disaster.

Today’s Bear of the Day is a stock with an earnings trend that has been a bit negative. I’m talking about Zacks Rank #5 (Strong Sell) Sprouts Farmers Market (SFM - Free Report) . Sprouts Farmers Market, Inc., a healthy grocery store, provides fresh, natural, and organic food products in the United States. Its stores offer fresh produce, meat and seafood, deli and baked goods, packaged groceries, vitamins and supplements, bulk foods, dairy and dairy alternatives, frozen foods, beer and wine, and natural body care and household items. As of October 25, 2018, it operated 315 stores in 19 states.

The reason for the unfavorable Zacks Rank lies in the recent negative revisions to earnings estimates. Over the last ninety days, nine analysts have cut their earnings estimates for next year. The bearish moves have cut the Zacks Consensus Estimates from $1.41 to $1.32 for next year.

The Food – Natural Foods Products industry currently ranks in the Bottom 16% of our Zacks Industry Rank. While Sprouts isn’t exactly lighting up the board with its Zacks Rank, Vitamin Shoppe is now a Zacks Rank #1 (Strong Buy). Other stocks in the same industry with lesser Zacks Ranks include Zacks Rank #3 (Hold) stocks Farmer Brothers (FARM - Free Report) and Performance Food Group (PFGC - Free Report) .

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Farmer Brothers Company (FARM) - free report >>

Sprouts Farmers Market, Inc. (SFM) - free report >>

Performance Food Group Company (PFGC) - free report >>

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