Comparing Wall Street’s outlook on SFM with peers
In this part of the series, we’ll look at Wall Street’s recommendation on Sprouts Farmers Market (SFM). Sprouts is covered by 24 Wall Street analysts, who have jointly rated the company a 2.3 on a scale where one is a strong buy and five is a strong sell. It has a better rating than most food retailers. Kroger (KR), Walmart (WMT), and Supervalu (SVU), in comparison, are rated 2.6, 2.4, and 2.7, respectively.
Sprouts’ better ratings reflect its steady performance in terms of healthy margins, consistent same-store sales, and strong earnings.
Sprouts stock is recommended as a “buy” by 54% of brokerage houses including Susquehanna, Oppenheimer, and J.P. Morgan. The remaining 46% of analysts suggest holding the stock including Morgan Stanley and Jefferies.
In comparison, 31% of the 26 analysts that track Kroger suggest buying it, 62% recommend holding it, and 8% suggest selling it. In Walmart’s case, 47% of analysts recommend buying the stock, 6% selling it, and 47% holding it.
Recent analyst actions on SFM
Susquehanna initiated coverage on SFM on October 17 with a positive rating. The company set a target price of $23, which represents a 22% upside on the October 23rd stock price of $18.81.
Investors looking to invest in SFM through ETFs can choose to invest in the PowerShares Dynamic Food & Beverage Portfolio (PBJ). SFM accounts for approximately 2.3% in PBJ.
Read the next section to learn about the valuations and earnings potential of Sprouts and its peers.