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Are Investors Undervaluing Sprouts Farmers (SFM) Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Sprouts Farmers (SFM - Free Report) . SFM is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 11.42. This compares to its industry's average Forward P/E of 15.48. Over the past year, SFM's Forward P/E has been as high as 17.93 and as low as 10.28, with a median of 15.52.

Investors should also note that SFM holds a PEG ratio of 1.24. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SFM's industry has an average PEG of 1.70 right now. Over the last 12 months, SFM's PEG has been as high as 4.78 and as low as 1.21, with a median of 2.21.

Finally, we should also recognize that SFM has a P/CF ratio of 5.66. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.44. SFM's P/CF has been as high as 7.93 and as low as 4.44, with a median of 6.83, all within the past year.

These are just a handful of the figures considered in Sprouts Farmers's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SFM is an impressive value stock right now.


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