Assessing Sprouts Farmers Market, Inc.’s (NASDAQ:SFM) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess SFM’s latest performance announced on 30 December 2018 and evaluate these figures to its historical trend and industry movements.
How Well Did SFM Perform?
SFM’s trailing twelve-month earnings (from 30 December 2018) of US$159m has increased by 0.2% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 16%, indicating the rate at which SFM is growing has slowed down. Why could this be happening? Well, let’s look at what’s going on with margins and whether the whole industry is experiencing the hit as well.
In terms of returns from investment, Sprouts Farmers Market has invested its equity funds well leading to a 27% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 11% exceeds the US Consumer Retailing industry of 6.3%, indicating Sprouts Farmers Market has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Sprouts Farmers Market’s debt level, has declined over the past 3 years from 19% to 17%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 84% to 98% over the past 5 years.
What does this mean?
Sprouts Farmers Market’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Sprouts Farmers Market has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Sprouts Farmers Market to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SFM’s future growth? Take a look at our free research report of analyst consensus for SFM’s outlook.
- Financial Health: Are SFM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.