Growth expectations for fiscal 2016 and fiscal 2017
Wall Street is expecting a slow beginning for Smart & Final Stores (SFS) in fiscal 2016. Analysts’ average earnings estimate indicates a 15% fall in EPS (earnings per share) in fiscal 1Q16, followed by 3% and 10% growth in the next two quarters, respectively. In fiscal 2016, SFS’s adjusted EPS are expected to rise 7% to $0.78. Analysts are expecting the company to deliver a strong fiscal 2017, with EPS growing by around 21% to $0.94.
Of the 11 analysts who rate SFS, 60% have recommended a “buy,” whereas 40% have recommended a “hold” on the stock. None of the analysts have given SFS a “sell” recommendation.
How does SFS compare to peers based on PE ratio?
SFS is currently trading at a PE (price-to-earnings) ratio of 21.3x based on EPS of $0.78 over the next 12 months. The stock is currently trading somewhere in the middle of its PE ratio range of 18x–24.2x.
Compared to the other companies in the food retail space, SFS seems to be sitting closer to the higher PE ratio category. While Walmart (WMT) and Kroger (KR) are trading at comparatively lower PE multiples of 16x and 17x, respectively, Whole Foods Market (WFM), Sprouts Farmers Market (SFM), and Costco (COST) are operating at PE ratios of 21x, 28x, and 27x, respectively.
Investors looking for exposure to Smart & Final Stores (SFS) through ETFs can invest in the SPDR S&P Retail ETF (XRT) or the iShares Morningstar Small-Cap ETF (JKJ). SFS makes up 0.26% and 0.1% of XRT and JKJ, respectively.