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Sprouts Farmers (SFM) Stock Sinks As Market Gains: What You Should Know

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Sprouts Farmers (SFM - Free Report) closed at $21.38 in the latest trading session, marking a -1.43% move from the prior day. This move lagged the S&P 500's daily gain of 1.47%. Meanwhile, the Dow gained 1.51%, and the Nasdaq, a tech-heavy index, added 1.11%.

Prior to today's trading, shares of the natural and organic food retailer had gained 18.07% over the past month. This has outpaced the Retail-Wholesale sector's gain of 16.84% and the S&P 500's gain of 16.09% in that time.

SFM will be looking to display strength as it nears its next earnings release, which is expected to be May 5, 2020. The company is expected to report EPS of $0.49, up 6.52% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.60 billion, up 13.16% from the year-ago period.

SFM's full-year Zacks Consensus Estimates are calling for earnings of $1.36 per share and revenue of $6.29 billion. These results would represent year-over-year changes of +8.8% and +11.61%, respectively.

It is also important to note the recent changes to analyst estimates for SFM. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 5.91% higher. SFM currently has a Zacks Rank of #1 (Strong Buy).

Looking at its valuation, SFM is holding a Forward P/E ratio of 15.98. This represents a premium compared to its industry's average Forward P/E of 14.89.

Meanwhile, SFM's PEG ratio is currently 4.32. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SFM's industry had an average PEG ratio of 4.32 as of yesterday's close.

The Food - Natural Foods Products industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 9, putting it in the top 4% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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