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Since Sprouts Farmers Market, Inc. (NASDAQ:SFM) released its earnings in September 2018, the consensus outlook from analysts appear pessimistic, as a -10% fall in profits is expected in the upcoming year compared with the past 5-year average growth rate of 19%. Currently with a trailing-twelve-month profit of US$158m, the consensus growth rate suggests that earnings will drop to US$142m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How will Sprouts Farmers Market perform in the near future?
Longer term expectations from the 19 analysts covering SFM’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of US$158m and the final forecast of US$165m by 2022, the annual rate of growth for SFM’s earnings is 4.8%. This leads to an EPS of $1.62 in the final year of projections relative to the current EPS of $1.17. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 3.4% to 2.6% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Sprouts Farmers Market, I’ve compiled three relevant factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Sprouts Farmers Market worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Sprouts Farmers Market is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sprouts Farmers Market? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.