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1. Company Snapshot

1.a. Company Description

Sprouts Farmers Market, Inc.offers fresh, natural, and organic food products in the United States.The company offers perishable product categories, including fresh produce, meat, seafood, deli, bakery, floral and dairy, and dairy alternatives; and non-perishable product categories, such as grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care.


As of January 2, 2022, it operated 374 stores in 23 states.Sprouts Farmers Market, Inc.was founded in 2002 and is headquartered in Phoenix, Arizona.

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1.b. Last Insights on SFM

Sprouts Farmers Market's recent performance was negatively impacted by moderating comparable sales and cautious guidance. Despite a Q3 profit beat, driven by margin gains and e-commerce growth, the company's sales slowdown and tough comparisons tempered its outlook. A $1 billion share repurchase plan provides downside support. Analysts revised earnings estimates lower following Q3 results, citing stretched valuation. The company's focus on sourcing and private-label gains aims to defend profitability. Several institutional investors adjusted their stakes, with Alberta Investment Management Corp growing its stake by 30.4%.

1.c. Company Highlights

2. Sprouts Farmers Market Delivers Strong Q3 Earnings, But Faces Challenging Q4

Sprouts Farmers Market reported total sales of $2.2 billion for Q3 2025, up 13% year-on-year, driven by a 5.9% increase in comparable store sales and strong performance from new stores. The company's EPS came in at $1.22, beating estimates of $1.17. Gross margin performance was not explicitly stated, but the company's ability to drive sales growth while maintaining a healthy bottom line is a testament to its effective execution of strategic initiatives.

Publication Date: Oct -31

📋 Highlights
  • Earnings Growth:: 34% year-on-year earnings growth with a 5.9% comparable store sales increase.
  • Total Sales:: $2.2 billion in Q3 2025, up 13% year-on-year driven by 5.9% comp growth and new store performance.
  • New Store Expansion:: 37 new stores planned for 2025, reflecting progress in real estate pipeline execution.
  • Q4 Comp Challenges:: Anticipated 10.5% comp sales in November and December, signaling consumer spending pressure.
  • Share Buybacks:: $1 billion share repurchase authorization, with opportunistic buybacks based on stock price.

Operational Highlights

The company's new store pipeline remains robust, with 37 new store openings planned for 2025, driven by the strong execution of its real estate pipeline and fewer timeline delays. Traffic remained positive, accounting for approximately 40% of the company's third-quarter comp. However, the company is facing some challenges, particularly in middle-income trade areas and among younger demographics, where sales have softened.

Guidance and Outlook

Sprouts Farmers Market expects total sales growth to be approximately 14% for the full year, with comp sales growth of around 7%. However, the company is cautious about its comp guidance for Q4, citing a challenging comparable base and a consumer environment that is becoming increasingly difficult. The company expects comps to be challenging in Q4, with a 10.5% comp in November and December.

Valuation and Growth Prospects

With the stock currently trading at a P/E Ratio of 15.59 and an EV/EBITDA of 9.76, investors are pricing in a certain level of growth. Analysts estimate next year's revenue growth at 11.0%, which is slightly lower than this year's expected growth rate. Given the company's strong track record of execution and its commitment to investing in its foundations for long-term growth, it is well-positioned to drive sustainable earnings growth. The company's ROE of 36.53% and ROIC of 14.94% are also indicative of its ability to generate strong returns on capital.

Investment Plans and Capital Allocation

Sprouts Farmers Market plans to continue investing in its business, with a focus on inventory management, category management, and cost reduction. The company is also committed to buying back shares opportunistically, with a $1 billion authorization. With its strong brand and loyal customer base, the company is well-positioned to drive long-term growth and create value for shareholders.

3. NewsRoom

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Sprouts Farmers Market, Inc. (SFM) Investors with Substantial Losses Have Opportunity to Lead Class Action Lawsuit - Robbins Geller Rudman & Dowd LLP

Dec -04

Source: globenewswire.com

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Alexandria Real Estate Shareholder Alert: ClaimsFiler Reminds Investors With Losses In Excess Of $100,000 Of Lead Plaintiff Deadline In Class Action Lawsuits Against Alexandria Real Estate Equities, Inc. - ARE

Dec -04

Source: globenewswire.com

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INVESTOR DEADLINE APPROACHING: Faruqi & Faruqi, LLP Investigates Claims on Behalf of Investors of Sprouts Farmers Market

Dec -04

Source: prnewswire.com

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Sprouts Farmers Market, Inc. Sued for Securities Law Violations - Contact the DJS Law Group to Discuss Your Rights – SFM

Dec -04

Source: globenewswire.com

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ROSEN, GLOBAL INVESTOR COUNSEL, Encourages Sprouts Farmers Market, Inc. Investors to Secure Counsel Before Important Deadline in Securities Class Action - SFM

Dec -04

Source: newsfilecorp.com

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SFM INVESTOR NOTICE: Sprouts Farmers Market, Inc. Investors with Substantial Losses Have Opportunity to Lead Class Action Lawsuit

Dec -04

Source: newsfilecorp.com

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Sprouts Farmers Market: With Premium Eroded, I'm Diving In

Dec -03

Source: seekingalpha.com

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NASDAQ: SFM: Kessler Topaz Meltzer & Check, LLP Announces the Filing of a Securities Class Action Lawsuit Against Sprouts Farmers Market, Inc. (SFM)

Dec -03

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.93%)

6. Segments

Perishables

Expected Growth: 6.5%

Sprouts Farmers Market's 6.5% growth in perishables is driven by increasing consumer demand for healthy and organic products, strategic store locations, and effective supply chain management. Additionally, the company's focus on private label products, high-quality meat and seafood offerings, and competitive pricing also contribute to the segment's growth.

Non-Perishables

Expected Growth: 7.5%

Sprouts Farmers Market's 7.5% growth in Non-Perishables is driven by increasing demand for healthy and organic products, expanding private label offerings, and strategic pricing. Additionally, the company's focus on e-commerce and curbside pickup has boosted sales, while its loyalty program and targeted promotions have enhanced customer retention and acquisition.

7. Detailed Products

Fresh Produce

Wide selection of fresh fruits and vegetables, including organic and locally sourced options

Meat and Seafood

Variety of natural and organic meats, poultry, and seafood, including grass-fed beef and wild-caught fish

Dairy and Eggs

Range of natural and organic dairy products, including milk, cheese, and eggs

Bakery

Freshly baked bread, pastries, and desserts, including gluten-free and vegan options

Bulk Foods

Wide selection of nuts, grains, and snacks in bulk, including organic and non-GMO options

Vitamins and Supplements

Range of natural vitamins, supplements, and wellness products

Natural Foods

Variety of natural and organic packaged foods, including gluten-free and vegan options

Body Care

Range of natural and organic body care products, including skincare and haircare

8. Sprouts Farmers Market, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Sprouts Farmers Market, Inc. faces moderate threat from substitutes due to the increasing popularity of meal kit delivery services and online grocery shopping. However, the company's focus on fresh, organic, and natural products differentiates it from substitutes.

Bargaining Power Of Customers

Sprouts Farmers Market, Inc. has a loyal customer base, and customers have limited bargaining power due to the company's unique product offerings and shopping experience.

Bargaining Power Of Suppliers

Sprouts Farmers Market, Inc. faces moderate bargaining power from suppliers due to the company's dependence on a few large suppliers for certain products. However, the company's scale and relationships with suppliers mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low for Sprouts Farmers Market, Inc. due to the high barriers to entry in the grocery retail industry, including the need for significant capital investment and established supply chains.

Intensity Of Rivalry

The grocery retail industry is highly competitive, and Sprouts Farmers Market, Inc. faces intense rivalry from established players such as Whole Foods Market, Trader Joe's, and conventional grocery stores.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 59.11%
Debt Cost 3.95%
Equity Weight 40.89%
Equity Cost 6.40%
WACC 4.95%
Leverage 144.59%

11. Quality Control: Sprouts Farmers Market, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Cal-Maine Foods

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Value: 8.1

Growth: 9.4

Quality: 8.1

Yield: 10.0

Momentum: 6.5

Volatility: 5.3

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Laureate Education

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Ingredion

A-Score: 6.5/10

Value: 6.8

Growth: 6.6

Quality: 5.9

Yield: 6.0

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Albertsons

A-Score: 6.0/10

Value: 7.2

Growth: 5.4

Quality: 3.5

Yield: 8.0

Momentum: 3.5

Volatility: 8.3

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A-Score: 5.4/10

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Growth: 5.6

Quality: 3.8

Yield: 6.0

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Sprouts Farmers Market

A-Score: 4.5/10

Value: 4.8

Growth: 8.1

Quality: 5.5

Yield: 0.0

Momentum: 4.0

Volatility: 4.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

85.54$

Current Price

85.54$

Potential

-0.00%

Expected Cash-Flows