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Sprouts Farmers Stock Hits 52-Week High: Buy, Hold or Take Profits?
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Sprouts Farmers Market, Inc. (SFM - Free Report) reached a new 52-week high of $147.21 yesterday, a significant milestone that has caught investors’ attention. The company's ongoing strategic initiatives and favorable economic conditions set a positive tone for its performance, leaving investors pondering whether it's time to buy the stock, hold their positions or take profits.
Over the past month, Sprouts Farmers stock has risen 27.1% compared with the industry’s growth of 14.6%. It has outperformed the broader Retail and Wholesale sector and the S&P 500 index, which posted growth of 3.9% and 2.7%, respectively.
Image Source: Zacks Investment Research
Technical indicators support Sprouts Farmers’ strong performance. The stock currently trades above its 50-day and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength implies a positive market sentiment and growing confidence in SFM’s prospects.
Decoding Tailwinds Behind SFM Stock’s Momentum
Sprouts Farmers continues to enhance its product assortment which is carefully curated to meet the needs of health-conscious customers. The company is steadily expanding its range of organic produce, which is growing at a faster rate than conventional options. Organic products now account for more than 46% of total produce sales in the third quarter of 2024, making organic choices more accessible for consumers.
Sprouts Farmers expanded its footprint by opening nine new stores in the third quarter, bringing its total to 428 locations across 23 states. This growth aligns with the company’s long-term strategy. With nearly 110 new stores approved and more than 70 executed leases in the pipeline, Sprouts Farmers is well-positioned for continued expansion.
Sprouts Farmers is prioritizing customer engagement by enhancing the company’s marketing efforts and successfully attracting more customers to its stores. Through a refined marketing strategy, SFM targets unique customer segments and customizes its media approach to reflect regional and market-specific preferences. SFM is also investing in technology to build a customer data foundation, allowing for highly tailored and personalized communications that enhance customer interactions, driving loyalty and fostering long-term customer engagement.
Sprouts Farmers has been enhancing its customer engagement strategies by developing a strong omnichannel experience. Through strategic partnerships with Uber Eats, DoorDash and Instacart, the company is expanding its digital presence and driving accelerated e-commerce growth.
Sprouts Farmers has optimized the company’s operations by leveraging advanced technology and refining processes, resulting in improved stock levels, reduced shrinkage, increased sales and an enhanced overall shopping experience for its customers.
SFM Leverages Strong Liquidity
Sprouts Farmers maintains a strong and healthy financial position with cash and cash equivalents amounting to $309.7 million as of Sept. 29, 2024. This substantial cash reserve appears more than adequate to address its long-term debt and finance-lease obligations totaling $7.7 million. The company generated $520.4 million in operating cash flow year to date through Sept. 29, 2024, and spent $132 million in capital expenditures, net of landlord reimbursement.
SFM’s Upbeat Outlook
For the fourth quarter of 2024, SFM projects comparable store sales growth between 8-10% and adjusted earnings per share in the range of 67 cents to 71 cents compared with 49 cents reported in the year-ago period.
For 2024, the company anticipates total sales growth of approximately 12%, with comparable store sales growth expected around 7%. Sprouts Farmers expects adjusted earnings before interest and taxes between $490 million and $495 million and full-year adjusted earnings in the range of $3.64 to $3.68 per share.
How Estimates Stack Up for Sprouts Farmers
Reflecting the positive sentiment around SFM, the Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past seven days, analysts have increased their estimates for the current and the next-fiscal year by 1.4% to $3.64 and 2% to $4.13 per share, respectively. These estimates indicate expected year-over-year growth rates of 28.2% and 13.6%, respectively.
Image Source: Zacks Investment Research
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Is SFM Stock Still Attractive After Recent Price Spike?
From a valuation perspective, Sprouts Farmers looks stretched. SFM’s forward 12-month price-to-earnings ratio was 36.06X, higher than the industry’s ratio of 21.07X. While the P/E ratio is elevated, this indicates the market's confidence in the company’s aggressive expansion into new markets and its product innovation.
Image Source: Zacks Investment Research
SFM’s Investment Analysis
Sprouts Farmers’ recent 52-week high highlights its strong focus on expanding product assortment, enhancing customer engagement and experience, and making operational improvements. The company’s stock has experienced a bullish trend in recent weeks. With a solid balance sheet and robust cash flow generation, SFM presents a compelling investment opportunity, particularly for investors looking for a resilient, growth-oriented stock. Sprouts Farmers currently sports a Zacks Rank #1 (Strong Buy).
3 Other Picks
Ingredion Incorporated (INGR - Free Report) manufactures and sells sweeteners, starches, nutrition ingredients and biomaterial solutions derived from wet milling and processing corn and other starch-based materials. The company currently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
INGR has a trailing four-quarter earnings surprise of 9.5%, on average. The Zacks Consensus Estimate for Ingredion’s current-financial year’s earnings indicates growth of 12.5% from the year-ago reported number.
Freshpet Inc. (FRPT - Free Report) manufactures, distributes and markets natural fresh meals and treats for dogs and cats. It currently carries a Zacks Rank #2 (Buy). FRPT has a trailing four-quarter earnings surprise of 144.5%, on average.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 27.3% and 224.3%, respectively, from the prior-year reported levels.
McCormick & Company, Incorporated (MKC - Free Report) is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors to the entire food industry. It currently carries a Zacks Rank #2. MKC has a trailing four-quarter earnings surprise of 13.8%, on average.
The Zacks Consensus Estimate for McCormick’s current fiscal-year sales and earnings indicates growth of 0.6% and 8.2%, respectively, from the prior-year reported levels.
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Sprouts Farmers Stock Hits 52-Week High: Buy, Hold or Take Profits?
Sprouts Farmers Market, Inc. (SFM - Free Report) reached a new 52-week high of $147.21 yesterday, a significant milestone that has caught investors’ attention. The company's ongoing strategic initiatives and favorable economic conditions set a positive tone for its performance, leaving investors pondering whether it's time to buy the stock, hold their positions or take profits.
Over the past month, Sprouts Farmers stock has risen 27.1% compared with the industry’s growth of 14.6%. It has outperformed the broader Retail and Wholesale sector and the S&P 500 index, which posted growth of 3.9% and 2.7%, respectively.
Image Source: Zacks Investment Research
Technical indicators support Sprouts Farmers’ strong performance. The stock currently trades above its 50-day and 200-day moving averages, indicating robust upward momentum and price stability. This technical strength implies a positive market sentiment and growing confidence in SFM’s prospects.
Decoding Tailwinds Behind SFM Stock’s Momentum
Sprouts Farmers continues to enhance its product assortment which is carefully curated to meet the needs of health-conscious customers. The company is steadily expanding its range of organic produce, which is growing at a faster rate than conventional options. Organic products now account for more than 46% of total produce sales in the third quarter of 2024, making organic choices more accessible for consumers.
Sprouts Farmers expanded its footprint by opening nine new stores in the third quarter, bringing its total to 428 locations across 23 states. This growth aligns with the company’s long-term strategy. With nearly 110 new stores approved and more than 70 executed leases in the pipeline, Sprouts Farmers is well-positioned for continued expansion.
Sprouts Farmers is prioritizing customer engagement by enhancing the company’s marketing efforts and successfully attracting more customers to its stores. Through a refined marketing strategy, SFM targets unique customer segments and customizes its media approach to reflect regional and market-specific preferences. SFM is also investing in technology to build a customer data foundation, allowing for highly tailored and personalized communications that enhance customer interactions, driving loyalty and fostering long-term customer engagement.
Sprouts Farmers has been enhancing its customer engagement strategies by developing a strong omnichannel experience. Through strategic partnerships with Uber Eats, DoorDash and Instacart, the company is expanding its digital presence and driving accelerated e-commerce growth.
Sprouts Farmers has optimized the company’s operations by leveraging advanced technology and refining processes, resulting in improved stock levels, reduced shrinkage, increased sales and an enhanced overall shopping experience for its customers.
SFM Leverages Strong Liquidity
Sprouts Farmers maintains a strong and healthy financial position with cash and cash equivalents amounting to $309.7 million as of Sept. 29, 2024. This substantial cash reserve appears more than adequate to address its long-term debt and finance-lease obligations totaling $7.7 million. The company generated $520.4 million in operating cash flow year to date through Sept. 29, 2024, and spent $132 million in capital expenditures, net of landlord reimbursement.
SFM’s Upbeat Outlook
For the fourth quarter of 2024, SFM projects comparable store sales growth between 8-10% and adjusted earnings per share in the range of 67 cents to 71 cents compared with 49 cents reported in the year-ago period.
For 2024, the company anticipates total sales growth of approximately 12%, with comparable store sales growth expected around 7%. Sprouts Farmers expects adjusted earnings before interest and taxes between $490 million and $495 million and full-year adjusted earnings in the range of $3.64 to $3.68 per share.
How Estimates Stack Up for Sprouts Farmers
Reflecting the positive sentiment around SFM, the Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past seven days, analysts have increased their estimates for the current and the next-fiscal year by 1.4% to $3.64 and 2% to $4.13 per share, respectively. These estimates indicate expected year-over-year growth rates of 28.2% and 13.6%, respectively.
Image Source: Zacks Investment Research
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Is SFM Stock Still Attractive After Recent Price Spike?
From a valuation perspective, Sprouts Farmers looks stretched. SFM’s forward 12-month price-to-earnings ratio was 36.06X, higher than the industry’s ratio of 21.07X. While the P/E ratio is elevated, this indicates the market's confidence in the company’s aggressive expansion into new markets and its product innovation.
Image Source: Zacks Investment Research
SFM’s Investment Analysis
Sprouts Farmers’ recent 52-week high highlights its strong focus on expanding product assortment, enhancing customer engagement and experience, and making operational improvements. The company’s stock has experienced a bullish trend in recent weeks. With a solid balance sheet and robust cash flow generation, SFM presents a compelling investment opportunity, particularly for investors looking for a resilient, growth-oriented stock. Sprouts Farmers currently sports a Zacks Rank #1 (Strong Buy).
3 Other Picks
Ingredion Incorporated (INGR - Free Report) manufactures and sells sweeteners, starches, nutrition ingredients and biomaterial solutions derived from wet milling and processing corn and other starch-based materials. The company currently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
INGR has a trailing four-quarter earnings surprise of 9.5%, on average. The Zacks Consensus Estimate for Ingredion’s current-financial year’s earnings indicates growth of 12.5% from the year-ago reported number.
Freshpet Inc. (FRPT - Free Report) manufactures, distributes and markets natural fresh meals and treats for dogs and cats. It currently carries a Zacks Rank #2 (Buy). FRPT has a trailing four-quarter earnings surprise of 144.5%, on average.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 27.3% and 224.3%, respectively, from the prior-year reported levels.
McCormick & Company, Incorporated (MKC - Free Report) is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors to the entire food industry. It currently carries a Zacks Rank #2. MKC has a trailing four-quarter earnings surprise of 13.8%, on average.
The Zacks Consensus Estimate for McCormick’s current fiscal-year sales and earnings indicates growth of 0.6% and 8.2%, respectively, from the prior-year reported levels.