With Sprouts Farmers Market, Inc. (SFM Quick QuoteSFM - Free Report) set to announce its third-quarter 2026 earnings results on Oct. 28, after the market closes, investors are faced with a critical question: Can SFM continue its streak of surprising results, or will challenges in the grocery sector temper growth?

The Zacks Consensus Estimate for third-quarter revenues stands at $2,329 million, indicating a 5.9% increase from the prior-year reported figure. On the earnings front, the consensus estimate has fallen by a couple of cents over the past 30 days to $1.22 per share, which remains flat compared with the year-ago period.

Sprouts Farmers has a trailing four-quarter earnings surprise of 2.9%, on average. In the last reported quarter, this Phoenix, AZ-based company surpassed the Zacks Consensus Estimate by 1.5%. 
 

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What the Zacks Model Indicates for SFM’s Q3 Earnings

As investors prepare for Sprouts Farmers’ third-quarter results, the question looms regarding an earnings beat or miss. Our proven model does not conclusively predict an earnings beat for Sprouts Farmers this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sprouts Farmers has a Zacks Rank #4 (Sell) and an Earnings ESP of -1.30%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Sprouts Farmers Market, Inc. Price, Consensus and EPS Surprise

Sprouts Farmers Market, Inc. price-consensus-eps-surprise-chart | Sprouts Farmers Market, Inc. Quote

Factors Likely to Have Shaped Sprouts Farmers' Q3 Outcome

Sprouts Farmers’ third-quarter performance is likely to have benefited from its continued store expansion and strong performance of new locations across established and emerging markets. A robust store pipeline, supported by efficient site selection and improved construction processes, is likely to have driven revenue growth and expanded the company’s market reach. Easing year-over-year comparisons and improving customer traffic trends may have supported comparable-store sales during the quarter. We expect comparable-store sales growth of 0.4% for the quarter under review.

The company’s emphasis on product innovation and differentiated assortments is likely to have supported sales. SFM's continued focus on fresh, natural and organic products, alongside offerings catering to consumer interest in protein, gut health, fiber and seed oil-free foods, has been resonating well with health-conscious shoppers. The growing popularity of Sprouts-branded products and healthy meal solutions is also likely to have encouraged customer purchases. 

Adding to these, Sprouts Farmers’ growing digital presence, loyalty initiatives and supply-chain improvements are anticipated to have aided its performance. The company's e-commerce business has been benefiting from strong customer demand for convenient shopping options, supported by its partnerships with Instacart, DoorDash and Uber Eats. Meanwhile, the increasing adoption of its loyalty program and greater use of customer data for personalized promotions and targeted marketing are likely to have strengthened customer relationships. On the operational front, the expansion of its fresh meat self-distribution network and the smooth functioning of its Northern California distribution center may have improved product freshness, service levels and inventory management. 

That said, Sprouts Farmers’ third-quarter profitability is likely to have faced pressure from a challenging consumer spending environment and elevated operating costs. Persistent inflation and affordability concerns have been prompting shoppers, particularly less-engaged and lower-income customers, to reduce shopping frequency and limit items in their baskets. Elevated fuel-related transportation costs and continued investments in customer value are likely to have weighed on margins. We expect operating margin to shrink 50 basis points year over year. A food safety concern tied to Cyclospora has shifted some shoppers away from lettuce and salads, which could have dampened fresh sales.

SFM Stock Price Performance

Shares of Sprouts Farmers have fallen 15.3% over the past three months compared with the industry’s 16.7% decline.

However, SFM has underperformed both Grocery Outlet Holding Corp. (GO Quick QuoteGO - Free Report) and The Kroger Co. (KR Quick QuoteKR - Free Report) during the same period. While shares of Kroger have advanced 12.8%, Grocery Outlet has surged 43.2%.
 

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Does SFM Present a Strong Case for Value Investing?

SFM’s valuation remains elevated relative to the industry. Sprouts Farmers currently trades at a forward 12-month price-to-sales (P/S) multiple of 0.61, which positions it at a premium compared to the industry’s average of 0.20. However, SFM is trading below its 12-month median P/S of 0.77.

Sprouts Farmers trades at a premium to Grocery Outlet and Kroger, which have forward 12-month P/S multiples of 0.27 and 0.26, respectively.
 

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Final Words on SFM

Sprouts Farmers’ store expansion, product innovation and digital initiatives provide a solid foundation for long-term growth. However, cautious consumer spending, rising operating costs and margin pressures remain near-term concerns. Its premium valuation and recent underperformance against peers further limit its appeal. With an earnings beat not conclusively indicated, investors should remain cautious ahead of the release.