The Market Is Missing the Mark on Sprouts' 1Q Results; Shares Now Offer Upside
When cutting through the various components of no-moat Sprouts Farmers Market’s first-quarter results, we recommend investors interested in the defensive retail space use the low-double-digit decline in shares (which now trade at a 15% discount to our valuation) as a buying opportunity. We think the market is reacting negatively toward revised full-year sales expectations that now call for 10.5%-11.5% growth versus its prior 11.5%-12.5% estimate; however, we posit its scaled-back outlook is main...Sprouts Farmers Market operates as a healthy grocery store. The company categorizes the varieties of products it sells as perishable and non-perishable. Perishable product categories include produce, meat, seafood, deli, bakery, floral and dairy and dairy alternatives. Non-perishable product categories include grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care. The company's stores include the following departments: packaged groceries, meat and seafood, deli, vitamins and supplements, dairy and dairy alternatives, bulk items, baked goods, frozen foods, natural health and body care, and beer and wine.
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