Sprouts Farmers Market’s stock market performance
Sprouts Farmers Market’s (SFM) solid business model and impressive comps growth have enabled the company to deliver healthy returns in the stock market. The company gained close to 30% in 2017. So far in 2018, the stock has risen ~14% despite the recent downgrades, which we discussed in the previous two parts.
Sprout Farmers Market’s stock price increased more than 12% after its second-quarter results on August 2, despite the company delivering average results. Investors appreciated the company’s consistent performance. The company hasn’t been fazed by Amazon’s (AMZN) entry into the grocery space after the Whole Foods acquisition.
Management’s decision to lift the guidance boosted the stock. The company increased the lower end of its fiscal 2018 EPS outlook to $1.24–$1.28—compared to the previous guidance of $1.22–$1.28.
Peers’ stock returns
Sprouts stock has outperformed the broader S&P 500 Index (+9% YTD) and the seven company S&P 500 Food and Staples Index (+7% YTD). Sprouts Farmers Market has also outperformed Kroger (KR) and Walmart (WMT) in 2018. While Kroger has gained 8% YTD, Walmart’s stock has fallen ~4% in 2018. Target (TGT) (34%) and Costco (COST) (25%) have performed even better.
Upside to Sprouts stock
Analysts see modest upside to Sprout Farmer Market stock in the next year. Analysts have set an average target price of $28.11 on Sprouts Farmers Market, which indicates an upside of ~2%. The individual target prices on the company range between $22 and $40.