NasdaqGS:SFM

Stock Analysis Report

Executive Summary

Sprouts Farmers Market, Inc., a healthy grocery store, provides fresh, natural, and organic food products in the United States.

Rewards

Trading at 17% below its fair value

Risk Analysis

Earnings are forecast to decline by an average of -0.08% per year for the next 3 years

Has a high level of debt

Highly volatile share price over past 3 months

Profit margins (2.4%) are lower than last year (3.7%)



Snowflake Analysis

Fair value with acceptable track record.


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Share Price & News

How has Sprouts Farmers Market's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SFM's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

4.5%

SFM

1.7%

US Consumer Retailing

1.5%

US Market


1 Year Return

-37.1%

SFM

15.6%

US Consumer Retailing

20.1%

US Market

Return vs Industry: SFM underperformed the US Consumer Retailing industry which returned 15.6% over the past year.

Return vs Market: SFM underperformed the US Market which returned 20.1% over the past year.


Shareholder returns

SFMIndustryMarket
7 Day4.5%1.7%1.5%
30 Day-12.2%1.6%1.4%
90 Day-21.9%-1.1%8.7%
1 Year-37.1%-37.1%17.7%15.6%22.7%20.1%
3 Year-19.2%-19.2%50.0%40.5%50.1%40.5%
5 Year-58.3%-58.3%47.8%32.6%73.1%54.1%

Price Volatility Vs. Market

How volatile is Sprouts Farmers Market's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Sprouts Farmers Market undervalued compared to its fair value and its price relative to the market?

17.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SFM ($15.45) is trading below our estimate of fair value ($18.62)

Significantly Below Fair Value: SFM is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: SFM is good value based on its PE Ratio (14.4x) compared to the Consumer Retailing industry average (22.2x).

PE vs Market: SFM is good value based on its PE Ratio (14.4x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: SFM's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: SFM is overvalued based on its PB Ratio (3.3x) compared to the US Consumer Retailing industry average (2.1x).


Next Steps

Future Growth

How is Sprouts Farmers Market forecast to perform in the next 1 to 3 years based on estimates from 17 analysts?

-0.08%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SFM's earnings are forecast to decline over the next 3 years (-0.08% per year).

Earnings vs Market: SFM's earnings are forecast to decline over the next 3 years (-0.08% per year).

High Growth Earnings: SFM's earnings are forecast to decline over the next 3 years.

Revenue vs Market: SFM's revenue (6.6% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: SFM's revenue (6.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SFM's Return on Equity is forecast to be low in 3 years time (18.7%).


Next Steps

Past Performance

How has Sprouts Farmers Market performed over the past 5 years?

8.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SFM has high quality earnings.

Growing Profit Margin: SFM's current net profit margins (2.4%) are lower than last year (3.7%).


Past Earnings Growth Analysis

Earnings Trend: SFM's earnings have grown by 8% per year over the past 5 years.

Accelerating Growth: SFM's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: SFM had negative earnings growth (-29.5%) over the past year, making it difficult to compare to the Consumer Retailing industry average (-6.1%).


Return on Equity

High ROE: SFM's Return on Equity (23.3%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Sprouts Farmers Market's financial position?


Financial Position Analysis

Short Term Liabilities: SFM's short term assets ($412.0M) do not cover its short term liabilities ($472.1M).

Long Term Liabilities: SFM's short term assets ($412.0M) do not cover its long term liabilities ($1.7B).


Debt to Equity History and Analysis

Debt Level: SFM's debt to equity ratio (93.3%) is considered high.

Reducing Debt: SFM's debt to equity ratio has increased from 39.6% to 93.3% over the past 5 years.

Debt Coverage: SFM's debt is well covered by operating cash flow (73.1%).

Interest Coverage: SFM's interest payments on its debt are well covered by EBIT (9.1x coverage).


Balance Sheet

Inventory Level: SFM has a high level of physical assets or inventory.

Debt Coverage by Assets: SFM's debt is not covered by short term assets (assets are 0.8x debt).


Next Steps

Dividend

What is Sprouts Farmers Market's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.7%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate SFM's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate SFM's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if SFM's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if SFM's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of SFM's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.4yrs

Average management tenure


CEO

Jack Sinclair (58yo)

0.7yrs

Tenure

0

Mr. Jack L. Sinclair has been Chief Executive Officer and a Member of board of director of Sprouts Farmers Market, Inc. Since June 24, 2019. He has been Chief Executive Officer of 99 Cents only Stores LLC  ...


Leadership Team

NamePositionTenureCompensationOwnership
Lawrence Molloy
Interim CFO & Director7.1yrsUS$194.49k0.032% $590.3k
Dan Sanders
Chief Operations Officer3.3yrsUS$990.17k0.028% $506.7k
Brandon Lombardi
Chief Human Resources & Legal Officer and Corporate Secretary8.1yrsUS$994.03k0.015% $279.6k
James Nielsen
Senior Advisor (Leave of Absence)0.5yrsUS$2.53m0.093% $1.7m
Jack Sinclair
CEO & Director0.7yrsno datano data
Daniel Bruni
Chief Information Officer5yrsUS$669.48kno data
Susannah Livingston
Vice President of Investor Relations & Treasury0yrsUS$321.36kno data
Theodore Frumkin
Chief Development Officer5yrsUS$763.13k0.024% $429.1k
David McGlinchey
Chief Merchandising Officer1.5yrsno data0.0054% $98.2k

2.4yrs

Average Tenure

58yo

Average Age

Experienced Management: SFM's management team is considered experienced (2.4 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Lawrence Molloy
Interim CFO & Director7.1yrsUS$194.49k0.032% $590.3k
Jack Sinclair
CEO & Director0.7yrsno datano data
Joseph Fortunato
Independent Non-Executive Chairman3yrsUS$194.49k0.018% $320.0k
Terri Graham
Independent Director6.8yrsUS$189.49k0.015% $281.3k
Joel Anderson
Director0.3yrsno data0.0088% $160.6k
Joseph O'Leary
Independent Director2.3yrsUS$164.49k0.0058% $105.9k
Kristen Blum
Independent Director3.5yrsUS$174.49k0.014% $262.3k

3.0yrs

Average Tenure

58yo

Average Age

Experienced Board: SFM's board of directors are considered experienced (3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: SFM insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Sprouts Farmers Market, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Sprouts Farmers Market, Inc.
  • Ticker: SFM
  • Exchange: NasdaqGS
  • Founded: 2002
  • Industry: Food Retail
  • Sector: Consumer Retailing
  • Market Cap: US$1.825b
  • Shares outstanding: 118.14m
  • Website: https://www.sprouts.com

Number of Employees


Location

  • Sprouts Farmers Market, Inc.
  • 5455 East High Street
  • Suite 111
  • Phoenix
  • Arizona
  • 85054
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SFMNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDAug 2013
1FADB (Deutsche Boerse AG)YesCommon StockDEEURAug 2013

Biography

Sprouts Farmers Market, Inc., a healthy grocery store, provides fresh, natural, and organic food products in the United States. Its stores offer fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, baked goods, dairy products, frozen foods, beer and wine, natural body care and household items. As of May 02, 2019, it operated 320 stores in 19 states. Sprouts Farmers Market, Inc. was founded in 2002 and is based in Phoenix, Arizona. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 00:45
End of Day Share Price2020/02/14 00:00
Earnings2019/09/29
Annual Earnings2018/12/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.