Report
Valens Research

SFM - Embedded Expectations Analysis - 2020 01 31

Sprouts Farmers Market (SFM:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) Earnings, with a 20.7x Uniform P/E. At these levels, the market has bearish expectations, and management may be concerned about store costs, market expansion, and their pricing.

Specifically, management may be concerned about elevated complexity and costs across larger stores, and they may lack confidence in their ability to operate smaller stores in a profitable and cost-effective manner. Moreover, they may lack confidence in their ability to sustain comparable store sales growth and expand their reach to new customers and markets. Furthermore, management may be concerned about their decision to lean on external expertise, and they may be exaggerating the benefits of their ERP systems, and their ability to leverage supply chain relationships to gain competitive pricing.
Underlying
Sprouts Farmers Markets Inc.

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.

Provider
Valens Research
Valens Research

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