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Can Sprouts Farmers Market Deliver Another Strong Quarter?

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Can Sprouts Farmers Market Deliver Another Strong Quarter? PART 1 OF 6

Sprouts Farmers Market: 3Q17 Earnings Preview

Sprouts Farmers Market’s 3Q17 earnings preview

Arizona-based Sprouts Farmers Market (SFM) is expected to release 3Q17 results on Thursday, November 2, 2017. The results relate to the three months ending October 1, 2017. Wall Street has predicted Sprouts’ earnings to rise 12.5% to 18 cents per share. Total sales are expected to rise 14% YoY (year-over-year) to $1.18 billion. The company cruised ahead of analysts’ top-line and bottom-line expectations during the first two quarters of the current fiscal year.

Sprouts Farmers Market: 3Q17 Earnings Preview

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About Sprouts Farmers Market

Established in 2002, Sprouts Farmers Market is a value-oriented healthy grocery store that offers a range of natural and organic foods. The company operates more than 280 stores in 15 US states. It follows a small-box format with an average store size of 28,000 to 30,000 square feet, which is about half the size of Whole Foods Market stores and one third the size of Kroger’s (KR) combination stores.

Valuations overview

Sprouts Farmers Market is currently trading at a one-year forward earnings multiple of 19x, which is close to the lower end of its 52-week price-to-earnings (or PE) range of 18.5x–26.9x.

The company trades at a premium to supermarkets Kroger (KR) and Supervalu (SVU), which are valued at 10.7x and 5.7x, respectively. Investors looking to invest in SFM through ETFs can choose to invest in the PowerShares Dynamic Food & Beverage Portfolio (PBJ). SFM makes up approximately 2.3% in PBJ.

What’s in this series?

The current series is a preview of Sprouts Farmers Market’s third-quarter results. In this series, we’ll talk about the company’s year-to-date financial performance, look at the company’s revenue and margin estimates for the coming quarter, discuss its stock market performance, and understand Wall Street’s view on it.

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