2Q16 Earnings Overview: SFM Beats on Earnings, Misses on Revenue

Sprouts Farmers Market (SFM) reported results for fiscal 2Q16[1. ended July 3, 2016] on Thursday, August 4, 2016. The value-oriented organic and natural food retailer reported a 14% year-over-year (or YoY) increase in adjusted diluted earnings per share (or EPS), beating the consensus by 1 cent.

SFM has delivered better-than-expected earnings in 11 of the last 12 quarters.

The company reported a 14% YoY increase in its top line as the net sales touched $1 billion. However, it missed the consensus sales estimates by $10.8 million.

• Net sales stood at $1 billion, growing 14% from the previous fiscal year.
• Comparable store sales grew by 4.1% while the two-year comparable store sales growth stood at 8.9%.
• Adjusted net income stood at $37 million, growing by 6% on a yearly basis.
• Adjusted diluted earnings per share stood at $0.25, registering a 14% YoY increase.

Established in 2002, Sprouts Farmers Market (SFM) operates as a value-oriented healthy grocery store that offers fresh, natural, and organic food. The company operates 243 stores in 13 states in the US.[2. as of August 4, 2016] It follows a small-box format with an average store size of 28,000 to 30,000 square feet, about half the size of Whole Foods (WFM) stores and one-third the size of Kroger’s (KR) combination stores.

Investors looking to invest in SFM through ETFs can choose to invest in the iShares S&P Mid-Cap 400 Growth ETF (IJK). SFM has a weight of approximately 0.44% in IJK.

This series is an earnings overview to SFM’s fiscal 1Q16 results. We will discuss Sprouts Farmers Market’s 2Q16 results, evaluate the key drivers, briefly look at the company’s stock market performance, and compare its valuations with supermarket peers like Whole Foods Market (WFM), Supervalu (SVU), and Kroger (KR).