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Sprouts Farmers Market, Inc.

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Shares of Sprouts Farmers have not only declined but also underperformed the industry in the past three months. Softer-than-expected comps and deceleration in growth rate overshadowed the fifth straight quarter of earnings beat in first-quarter 2018. Apart from this, lower-than-anticipated net sales after six successive positive surprises, coupled with trimmed sales and comps view for the full year also disappointed investors. Management hinted that the company’s discontinuation of Amazon Prime Now home-delivery partnership and transition to Instacart is likely to impact comps. Nonetheless, the company reiterated full year earnings projection. Looking ahead, we observe that the company is taking prudent steps to expand its customer base, and the launch of website and mobile app are testimony to the same. The company is trying all means to provide ready-to-eat, ready-to-heat, and ready-to-cook items to customers.

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