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Here's Why Sprouts Farmers (SFM) Stock Warrants Your Attention
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Sprouts Farmers Market, Inc. (SFM - Free Report) , a recognized name in the grocery space, has exhibited a decent run on the bourse so far in the year. Due to its operational initiatives — strengthening omnichannel solutions, expanding the customer reach and focusing on private-label offerings — the stock has outpaced the Zacks Food-Natural Foods Products industry. In the said period, shares of this Zacks Rank #3 (Hold) company have increased about 12%, while the industry has risen 11.4%.
The Zacks Consensus Estimate for earnings per share for the current and next financial year has risen 4.8% and 1.5% to $2.64 and $2.77, respectively, over the past 30 days. Estimates suggest an increase of 10.5% and 4.7%, respectively, from the year-ago period. The northward movement of the consensus mark indicates that analysts have become optimistic about the stock following better-than-expected first-quarter 2023 results and a decent outlook.
A Look at Q1 Performance
Sprouts Farmers delivered adjusted quarterly earnings of 98 cents a share, which cruised past both the Zacks Consensus Estimate and our estimate of 85 cents. Impressively, the bottom line increased 24% from the 79 cents reported in the year-ago period.
Net sales of $1,733.3 million came ahead of the Zacks Consensus Estimate of $1,722 million and our estimate of $1,716.8 million. The metric increased 6% on a year-on-year basis. The growth was driven by sales from the new stores and a jump in comparable store sales.
Comparable store sales increased 3.1% during the quarter under review, backed by higher traffic and a net increase in the basket due to retail inflation.
Image Source: Zacks Investment Research
Let’s Introspect
To expand its customer base, Sprouts Farmers has been taking several initiatives focused on product innovation, customer experience and targeted marketing with everyday great pricing and technology. It is steadily expanding its presence in the natural organic space, given the huge demand in the segment. It has been reducing operational complexity, optimizing production, improving the in-stock position and updating to smaller-format stores.
Apart from these, the company is trying to expand private-label offerings in departments under the Sprouts Market Corner Deli and The Butcher Shop at Sprouts. Product innovation continues to drive sales of private-label items.
Sprouts Farmers is focused on creating a robust omnichannel experience for customers. The company has been providing hassle-free shopping through the Sprouts.com website and the mobile app and creating a supply chain that provides the freshest produce while updating store prototypes. Sprouts Farmers is gradually heading toward its strategic goal of 10% unit growth per year. It currently intends to open 30 new stores in 2023.
Sprouts Farmers’ partnership with Instacart and DoorDash enables it to enter new marketplaces and strengthen e-commerce growth. It has rolled out the grocery pickup service at all its stores. The home delivery business is also available at the company’s stores. In the first quarter of 2023, e-commerce sales grew in the double digits and represented 12.2% of total sales in the quarter.
Bottom Line
Sprouts Farmers being laser-focused, has been redefining strategies and upgrading capabilities to stay ahead of the curve. For 2023, Sprouts Farmers expects net sales growth of 5-6% and comparable store sales growth of 2-3%. It foresees full-year adjusted earnings in the band of $2.58-$2.68 per share, up from the $2.39 reported in 2022.
Stocks Looking Red Hot
Here we have highlighted three better-ranked stocks, namely Kroger (KR - Free Report) , The TJX Companies (TJX - Free Report) and General Mills (GIS - Free Report) .
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 2.5% and 6.6%, respectively, from the year-ago reported figure. Kroger has a trailing four-quarter earnings surprise of 9.8%, on average.
TJX Companies, which operates as an off-price apparel and home fashions retailer, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 10.5%.
The Zacks Consensus Estimate for TJX Companies’ current financial-year sales and earnings suggests growth of 6.4% and 12.9% from the year-ago period. TJX has a trailing four-quarter earnings surprise of 6%, on average.
General Mills, which manufactures and markets branded consumer foods, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 7.5%.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and earnings suggests growth of 6.3% and 7.4% from the year-ago period. GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
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Here's Why Sprouts Farmers (SFM) Stock Warrants Your Attention
Sprouts Farmers Market, Inc. (SFM - Free Report) , a recognized name in the grocery space, has exhibited a decent run on the bourse so far in the year. Due to its operational initiatives — strengthening omnichannel solutions, expanding the customer reach and focusing on private-label offerings — the stock has outpaced the Zacks Food-Natural Foods Products industry. In the said period, shares of this Zacks Rank #3 (Hold) company have increased about 12%, while the industry has risen 11.4%.
The Zacks Consensus Estimate for earnings per share for the current and next financial year has risen 4.8% and 1.5% to $2.64 and $2.77, respectively, over the past 30 days. Estimates suggest an increase of 10.5% and 4.7%, respectively, from the year-ago period. The northward movement of the consensus mark indicates that analysts have become optimistic about the stock following better-than-expected first-quarter 2023 results and a decent outlook.
A Look at Q1 Performance
Sprouts Farmers delivered adjusted quarterly earnings of 98 cents a share, which cruised past both the Zacks Consensus Estimate and our estimate of 85 cents. Impressively, the bottom line increased 24% from the 79 cents reported in the year-ago period.
Net sales of $1,733.3 million came ahead of the Zacks Consensus Estimate of $1,722 million and our estimate of $1,716.8 million. The metric increased 6% on a year-on-year basis. The growth was driven by sales from the new stores and a jump in comparable store sales.
Comparable store sales increased 3.1% during the quarter under review, backed by higher traffic and a net increase in the basket due to retail inflation.
Image Source: Zacks Investment Research
Let’s Introspect
To expand its customer base, Sprouts Farmers has been taking several initiatives focused on product innovation, customer experience and targeted marketing with everyday great pricing and technology. It is steadily expanding its presence in the natural organic space, given the huge demand in the segment. It has been reducing operational complexity, optimizing production, improving the in-stock position and updating to smaller-format stores.
Apart from these, the company is trying to expand private-label offerings in departments under the Sprouts Market Corner Deli and The Butcher Shop at Sprouts. Product innovation continues to drive sales of private-label items.
Sprouts Farmers is focused on creating a robust omnichannel experience for customers. The company has been providing hassle-free shopping through the Sprouts.com website and the mobile app and creating a supply chain that provides the freshest produce while updating store prototypes. Sprouts Farmers is gradually heading toward its strategic goal of 10% unit growth per year. It currently intends to open 30 new stores in 2023.
Sprouts Farmers’ partnership with Instacart and DoorDash enables it to enter new marketplaces and strengthen e-commerce growth. It has rolled out the grocery pickup service at all its stores. The home delivery business is also available at the company’s stores. In the first quarter of 2023, e-commerce sales grew in the double digits and represented 12.2% of total sales in the quarter.
Bottom Line
Sprouts Farmers being laser-focused, has been redefining strategies and upgrading capabilities to stay ahead of the curve. For 2023, Sprouts Farmers expects net sales growth of 5-6% and comparable store sales growth of 2-3%. It foresees full-year adjusted earnings in the band of $2.58-$2.68 per share, up from the $2.39 reported in 2022.
Stocks Looking Red Hot
Here we have highlighted three better-ranked stocks, namely Kroger (KR - Free Report) , The TJX Companies (TJX - Free Report) and General Mills (GIS - Free Report) .
Kroger, which operates as a supermarket operator, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 2.5% and 6.6%, respectively, from the year-ago reported figure. Kroger has a trailing four-quarter earnings surprise of 9.8%, on average.
TJX Companies, which operates as an off-price apparel and home fashions retailer, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 10.5%.
The Zacks Consensus Estimate for TJX Companies’ current financial-year sales and earnings suggests growth of 6.4% and 12.9% from the year-ago period. TJX has a trailing four-quarter earnings surprise of 6%, on average.
General Mills, which manufactures and markets branded consumer foods, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 7.5%.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and earnings suggests growth of 6.3% and 7.4% from the year-ago period. GIS has a trailing four-quarter earnings surprise of 8.1%, on average.