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Factors Likely to Influence Sprouts Farmers (SFM) Q2 Earnings

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Sprouts Farmers Market, Inc. (SFM - Free Report) is scheduled to report second-quarter 2019 results on Aug 1, before the market opens. In the trailing four quarters, this provider of fresh, natural, and organic food products has outperformed the Zacks Consensus Estimate by an average of 6.1%. In the last reported quarter, the company reported positive earnings surprise of 15%.

How Are Estimates Shaping Up?

After registering a bottom-line decrease of about 8% in the first quarter of 2019, Sprouts Farmers is likely to report year-over-year decline of roughly 3.1% in the second quarter. This is evident from the Zacks Consensus Estimate for the quarter under review, which is pegged at 31 cents compared with 32 cents reported in the year-ago quarter. We note that the Zacks Consensus Estimate has been stable in the last 30 days.

The Zacks Consensus Estimate for revenues is pegged at $1,446 million, indicating an improvement of 9.4% from the year-ago quarter. We note that total revenue of this Phoenix, AZ-based company had increased 10% in the last reported quarter driven by comparable store sales growth of 1.4% and robust performance in new outlets.

Factors Influencing the Performance

In an effort to expand customer base, Sprouts Farmers has been taking several initiatives focused on product innovation, customer experience and technology. The company launched Sprouts.com website and mobile app to aid hassle-free shopping. Moreover, the company has partnered with Instacart to offer same-day delivery to customers. The home delivery business, which is available in more than 200 stores, will be offered in all markets by the end of 2019. These initiatives are likely to aid the top-line performance in the to-be-reported quarter.

Further, Sprouts Farmers is striving to provide ready-to-eat, ready-to-heat, and ready-to-cook items to customers. Apart from these, the company is trying to expand private-label offerings in departments under the Sprouts Market Corner Deli, The Butcher Shop at Sprouts and Sprouts Fish Market brands. Moreover, with fresh item management technology, the company aims at lowering operational complexity, optimizing production, improving in-stock position, lowering down shrink and driving incremental sales.

All these endeavors are likely to have a favorable impact on the top line. The Zacks Consensus Estimate for comparable store sales for the quarter under review stands at approximately 2%. However, any deleverage in SG&A and direct store expenses may hurt margins and in turn the bottom line. Analysts pointed that deleverage in SG&A expenses may be owing to wage investment, increased training related with the fresh item management and other systems implementations, and rise in health and benefit costs.

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


 

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

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

What the Zacks Model Unveils

Our proven model does not conclusively show that Sprouts Farmers is likely to beat bottom-line estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Sprouts Farmers has a Zacks Rank #4 (Sell) and an Earnings ESP of -2.78%, consequently making the surprise prediction difficult.

3 More Stocks With a Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

The Estee Lauder Companies Inc. (EL - Free Report) has an Earnings ESP of +7.80% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

General Mills, Inc. (GIS - Free Report) has an Earnings ESP of +0.97% and a Zacks Rank #2.

Kellogg Company (K - Free Report) has an Earnings ESP of +0.91% and a Zacks Rank #3.

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