How Do The Fresh Market’s Price Multiples Compare with Peers’?



A quick look at The Fresh Market’s price multiples

As of February 9, 2016, The Fresh Market’s (TFM) shares were trading at $18.70 per share, which is among the lowest prices for the stock since it was listed in November 2010. The company’s market capitalization, which stood at close to $2 billion at the beginning of 2015, has fallen to ~$877 million.

The analyst community is expecting TFM’s 2016 EPS (earnings per share) to come down 2% to $1.57 per share. At this EPS level and with historically low prices, the company is currently trading at a one-year forward PE (price-to-earnings) ratio of 11.7x, which is in the lower end of its PE range of 11.6x–21.8x between January 1, 2015, and February 9, 2016.

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TFM cheaper than peers

Not only is TFM trading at the lower end of its PE range but it is also the cheapest in its peer group. Whole Foods Market (WFM), the premium organic grocer, is currently trading at a PE of 18.8x, while TFM’s close competitor Sprouts Farmers Market (SFM) is trading at an earnings multiple of 24x. Kroger (KR), which recently touched its all-time high price in December 2015, is currently trading at 16.9x.

In terms of price-to-sales ratios, TFM is trading at one-year forward sales multiple of 0.4x, which is lower than the S&P multiple of 1.6x. Whole Foods Market is trading at forward PS of 0.6x, while SFM is trading at 0.9x.

ETF exposure

The Fresh Market (TFM), Kroger (KR), Whole Foods Market (WFM), and Sprouts Farmers Market (SFM) are part of the Fidelity MSCI Consumer Staples ETF (FSTA) and account for 2.6% of the index weight. Continue to the next part of this series for a SWOT (strength, weakness, opportunity, and threat) analysis of TFM.


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