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Is Sprouts Farmers (SFM) a Great Value Stock Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Sprouts Farmers (SFM - Free Report) is a stock many investors are watching right now. SFM is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 15.42 right now. For comparison, its industry sports an average P/E of 20.53. SFM's Forward P/E has been as high as 17.93 and as low as 10.28, with a median of 15.61, all within the past year.

Finally, our model also underscores that SFM has a P/CF ratio of 7.26. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. SFM's current P/CF looks attractive when compared to its industry's average P/CF of 9.96. Within the past 12 months, SFM's P/CF has been as high as 9.18 and as low as 4.44, with a median of 7.09.

These are just a handful of the figures considered in Sprouts Farmers's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SFM is an impressive value stock right now.


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