Why Sprouts Farmers (SFM) Dipped More Than Broader Market Today

Zacks
21 Mar

Sprouts Farmers (SFM) closed at $139.77 in the latest trading session, marking a -0.75% move from the prior day. The stock's change was less than the S&P 500's daily loss of 0.22%. On the other hand, the Dow registered a loss of 0.03%, and the technology-centric Nasdaq decreased by 0.33%.

Coming into today, shares of the natural and organic food retailer had lost 19.98% in the past month. In that same time, the Retail-Wholesale sector lost 9.98%, while the S&P 500 lost 7.48%.

Investors will be eagerly watching for the performance of Sprouts Farmers in its upcoming earnings disclosure. The company is expected to report EPS of $1.53, up 36.61% from the prior-year quarter. Simultaneously, our latest consensus estimate expects the revenue to be $2.19 billion, showing a 16.28% escalation compared to the year-ago quarter.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $4.66 per share and a revenue of $8.64 billion, indicating changes of +24.27% and +11.88%, respectively, from the former year.

Investors should also note any recent changes to analyst estimates for Sprouts Farmers. Recent revisions tend to reflect the latest near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 10.08% higher. Sprouts Farmers is currently a Zacks Rank #2 (Buy).

Investors should also note Sprouts Farmers's current valuation metrics, including its Forward P/E ratio of 30.25. This indicates a premium in contrast to its industry's Forward P/E of 16.92.

Investors should also note that SFM has a PEG ratio of 1.97 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Food - Natural Foods Products industry currently had an average PEG ratio of 1.43 as of yesterday's close.

The Food - Natural Foods Products industry is part of the Retail-Wholesale sector. At present, this industry carries a Zacks Industry Rank of 46, placing it within the top 19% of over 250 industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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