Wall Street’s outlook on SFM
In the current part of the series, we’ll look at Wall Street’s recommendation and current valuations for Sprouts Farmers Market (SFM).
21 Wall Street analysts cover SFM stock. They have a neutral to positive view on the company and have jointly rated the stock a 2.2 on a scale where one is a “strong buy” and five is a “sell.” The company has a better rating than peers Whole Foods Market (WFM) and Supervalu (SVU), which are rated 3.2 and 2.6, respectively. Kroger (KR) also has a rating of 2.2 currently.
Of the 21 analysts who rate Sprouts Farmers Market, 57% recommend a “buy” on the company, while 43% recommend a “hold.” There are no sell recommendations on the company.
SFM has received the highest number of buy ratings among grocery sector stocks. In comparison, 19% and 27% of analysts recommend buying Supervalu and Whole Foods, respectively. Kroger is a close second with 56% “buy” recommendations. However, 8% of the analysts recommend selling Kroger stock.
A look at valuations
Sprouts Farmers Market is currently trading at a one-year forward earnings multiple of 25.6x versus a three-year average of 30x.
The company continues to trade at a premium to supermarket chains Kroger (KR) and Supervalu (SVU), which are valued at 13.7x and 11x, respectively. It, however, trades at a slight discount to Whole Foods Market (WFM). WFM is valued at 27.3x on next-12-month earnings.
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 3.2% in FXG.