Sprouts Farmers Market Beat Wall Street’s Expectations in 4Q16

Sonya Bells - Author

Feb. 27 2017, Published 4:05 p.m. ET

Series snapshot

Phoenix, Arizona–based Sprouts Farmers Market (SFM) reported its 4Q16 and 2016 results on February 23, 2017. The results relate to the three-month period that ended on January 1, 2017.

The company came in ahead of Wall Street analysts’ revenue and earnings estimates. Its revenue rose 6% YoY (year-over-year) to $986 million, $11 million more than the consensus forecasts. Its earnings per share (or EPS) fell 28% to $0.13, beating the consensus estimate by $0.01.

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About Sprouts Farmers Market

Established in 2002, Sprouts Farmers Market operates as a value-oriented, healthy grocery store and offers fresh, natural, and organic food. The company operated 255 stores in 14 US states as of January 1, 2017.

Valuation overview

Sprouts is currently trading at a one-year forward earnings multiple of 22.2x, close to the lower end of its 52-week price-to-earnings (or PE) range of 20.3x–30.5x.

The company is trading at a premium to Kroger (KR) and SUPERVALU (SVU), which are valued at 15.7x and 10.2x, respectively. It’s trading at a slight discount to Whole Foods Market (WFM), which is currently valued at 23.7x.

SFM is covered by 21 Wall Street analysts, 57% of whom recommend buying the stock. The remaining recommend holding it. There are no “sell” recommendations on SFM.

Investors looking to invest in SFM through ETFs can choose to invest in the iShares Morningstar Small-Cap Growth ETF (JKK). SFM has a weight of ~0.46% in JKK.

In this series

This series is an overview of Sprouts Farmers Market’s 4Q16 results. We’ll discuss the company’s financial performance during the quarter and the year, its key revenue drivers, analyst recommendations, and current valuations.


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