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Sprouts Farmers Market Inc SFM Stock Quote

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Morningstar‘s Stock Analysis SFM

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Is it the right time to buy or sell?

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Strong Third Quarter at Sprouts Suggests Its Turnaround Is on Track; Shares Trade Fairly

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

Our $29.50 per share valuation of no-moat Sprouts should rise by a mid-single-digit percentage (similar to the after-hours trading response) after the firm posted strong third-quarter earnings, with comparable sales up 2.4% and a roughly flat EBITDA margin (7.6%) despite a rising cost environment. We still expect mid-single-digit marks for Sprouts’ long-term annual percentage sales growth and adjusted EBITDA margins, and suggest prospective investors await a greater margin of safety.

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Key Statistics SFM

Company Profile SFM

Business Description

Sprouts Farmers Market is an American specialty grocer offering an assortment highlighting fresh and naturally derived products. Its offerings are especially focused on produce, which constituted around 21% of sales in fiscal 2021. Founded in 2002, the chain is most heavily concentrated in California, which accounted for over one third of its 374 stores as of the end of fiscal 2021. All of the company’s operations are in the United States, with its stores largely located in the southern half of the country. The firm sells roughly 20,000 products (of which around 70% are attribute driven, such as organic, plant-based, or catering to the keto or paleo diet), with private-label products accounting for about 16% of sales in fiscal 2021. Perishable items accounted for 58% of fiscal 2021 sales.

5455 East High Street, Suite 111
Phoenix, AZ, 85054
T +1 480 814-8016
Industry Grocery Stores
Most Recent Earnings Sep 30, 2022
Fiscal Year End Jan 2, 2023
Employees 31,000