Wall Street’s outlook on SFM
In the current part of the series, we’ll look at Wall Street’s recommendation on Sprouts Farmers Market (SFM). We’ll also discuss the company’s current valuations briefly.
21 Wall Street analysts cover SFM. They have a neutral to a positive view on the company. SFM is jointly rated a 2.1 on a scale where one is a “strong buy” and five is a “strong sell.” It has a better rating than peers. Whole Foods Market (WFM), Supervalu (SVU), and Kroger (KR) are rated 3.2, 2.6, and 2.2, respectively.
Of the 21 analysts who rate Sprouts Farmers Market, 57% have recommended buying the stock, while 43% recommend holding it. There are no “sell” recommendations on the stock.
In comparison to peers, the company has received the most “buy” ratings from Wall Street. 18% and 20% of analysts recommend buying Supervalu and Whole Foods, respectively. Kroger is also a Wall Street favorite with 56% “buy” recommendations.
A look at valuations
Sprouts Farmers Market is currently trading at a one-year forward earnings multiple of 21.5x, operating close to the lower end of its 52-week price-to-earnings (or PE) range of 20.3x–30.5x.
The company continues to trade at a premium to Kroger (KR) and Supervalu (SVU), which are valued at 15.6x and 10.0x on a one-year forward PE basis. It, however, trades at a slight discount to Whole Foods Market (WFM), which is currently valued at 22.8x.
Investors looking to invest in SFM through ETFs can choose to invest in the First Trust Consumer Staples AlphaDEX Fund (FXG). SFM has a weight of approximately 0.81% in FXG.