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Sprouts Farmers Market’s Near-Term and Mid-Term Guidance

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Sprouts Farmers Market’s guidance for fiscal 2015

Based on its solid 3Q15 results, Sprouts Farmers Market’s (SFM) management is anticipating strong growth for its fiscal 2015, which ends on December 31. The company expects its top line to grow between 19%–21% on 5%–5.5% comps (comparable sales) growth. This is in line with the average Wall Street analyst estimate of 20.4% growth in sales for fiscal 2015. Wall Street expects Sprouts’ growth spree to continue into fiscal 2016 and has predicted a top line growth of 15.5% in fiscal 2016.

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As for Sprouts’ bottom line, the company’s management is expecting its net income to grow between 16% and 18% in fiscal 2015 and its EPS (earnings per share) to range between $0.83 and $0.84. The average Wall Street analyst estimate for Sprouts’ 2015 EPS is $0.83. The analyst community is expecting EPS of $0.95 in fiscal 2016, which would mean a growth of 14.5%.

The following table provides information on Sprout Farmers Market’s 2015 guidance:

Mid-term guidance

The company’s management continues to remain upbeat on Sprouts’ expected performance in the mid-term. Sprouts’ sales are predicted to grow by more than 15% in the mid-term, based on 14% growth in store units and mid-single-digit growth in comparable store sales. The company has adjusted and broadened its EBITDA (earnings before interest, taxes, depreciation, and amortization) as well as its EPS targets, which stand at 12%–16% (for EBITDA) and 14%–18% (for diluted EPS).

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During its 3Q15 conference call, Sprouts Farmers Market Chief Executive Officer Amin Maredia stated that the company is “accelerating investments across the enterprise in product innovation, business intelligence, and our team, to build on our industry-leading sales momentum and support long-term growth.” As a result, we are adjusting our mid-term EBITDA and EPS guidance, while maintaining our sales and unit growth targets. These investments will allow Sprouts to remain an innovator in the natural and organic sector and increase our relevance to customers.”

Maredia added that the company is adjusting its “mid-term EBITDA and EPS guidance, while maintaining our sales and unit growth targets,” explaining that “these investments will allow Sprouts to remain an innovator in the natural and organic sector and increase our relevance to customers.”

The following table provides information on Sprout Farmers Market’s mid-term guidance:

ETF exposure

Sprouts (SFM) and competitors Kroger Company (KR), Whole Foods Market (WFM), and The Fresh Market (TFM) are included in the holdings of the SPDR S&P Retail ETF (XRT). Together, these companies account for approximately 4.2% of the fund’s total holdings.

Now let’s look at Sprouts Farmers Market’s stock performance.

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