Sprouts Farmers Market (SFM) Is Today's Post-Market Loser Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Sprouts Farmers Market ( SFM) as a post-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Sprouts Farmers Market as such a stock due to the following factors:

  • SFM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $55.2 million.
  • SFM is down 2.4% today from today's close.

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More details on SFM:

Sprouts Farmers Market, Inc. operates as a specialty retailer of fresh, natural, and organic food in the United States. SFM has a PE ratio of 44.6. Currently there are 6 analysts that rate Sprouts Farmers Market a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Sprouts Farmers Market has been 1.4 million shares per day over the past 30 days. Sprouts Farmers Market has a market cap of $4.8 billion and is part of the services sector and retail industry. Shares are down 8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sprouts Farmers Market as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including premium valuation, relatively poor performance when compared with the S&P 500 during the past year and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.5%. Since the same quarter one year prior, revenues rose by 20.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SPROUTS FARMERS MARKET reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SPROUTS FARMERS MARKET increased its bottom line by earning $0.70 versus $0.23 in the prior year. This year, the market expects an improvement in earnings ($0.88 versus $0.70).
  • The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that SFM's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.
  • In its most recent trading session, SFM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.

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