Sprouts Farmers Market (SFM): Evaluating Current Valuation After Sharp 24% One-Month Share Price Drop

Sprouts Farmers Market (SFM) stock has drawn some attention lately as investors weigh its recent share performance along with its revenue and net income growth. Over the past month, the shares have declined nearly 24%.

See our latest analysis for Sprouts Farmers Market.

After a sharp 23.8% drop in the 1-month share price, Sprouts Farmers Market now sits at $80.99. This follows a stretch of fading momentum, with the 1-year total shareholder return at -47.2%. Even though the total return over three and five years still shows sizeable gains, it seems the market is re-evaluating expectations. The recent correction could be resetting the stage for a shift in sentiment as investors digest these dramatic moves.

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With shares now trading at a significant discount to analyst targets and solid growth in both revenue and net income, the key question is this: is Sprouts Farmers Market undervalued here, or is the current price already factoring in its future prospects?

Most Popular Narrative: 33.6% Undervalued

According to tripledub, the market’s recent pullback has taken Sprouts Farmers Market shares far below the narrative’s $122 fair value. This has opened up a notable discount from the last close at $80.99. This gap sets the tone for a closer look at the drivers behind the narrative’s position on valuation.

The company generated $4.46B in revenue during H1 2025 (+18% YoY) while expanding gross margins to 39.2% from 38.1%, a remarkable achievement in the razor-thin grocery industry. The specialty grocer's 455 stores are capturing market share with blistering 10.9% comparable store sales growth. Its zero-debt balance sheet and $410M in H1 2025 operating cash flow ($580M+ annualized) provide ammunition for aggressive expansion.

Read the complete narrative.

What is the secret sauce behind that punchy fair value? Massive expansion, margin growth, and enough operating cash to fuel aggressive store openings are only a piece of this story. There is a pivotal assumption about just how long these high performance metrics can last. Find out which bold forecasts really drive this narrative’s premium.

Result: Fair Value of $122 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slowing comparable store sales and fierce competition in natural and organic foods could quickly challenge the bullish case from this point forward.

Find out about the key risks to this Sprouts Farmers Market narrative.

Build Your Own Sprouts Farmers Market Narrative

If you have a different outlook or want to dig deeper into the numbers yourself, you can build your own narrative for Sprouts Farmers Market in just a few minutes. Do it your way

A great starting point for your Sprouts Farmers Market research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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