Sprouts Farmers Market (NasdaqGS:SFM) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

Sprouts Farmers Market, Inc. (NasdaqGS:SFM) is scheduled to report Q3 earnings results after markets close for trading on October 28, 2020.

The company is expected to report earnings of $0.35/share on revenue of $1.625 billion. The consensus earnings per share (EPS) of $0.35/share is based on a poll of 15 analysts and represents a growth in eps of 59.1% over the same quarter last year, when the company reported earnings of $0.22/share.

The revenue forecast of $1.625 billion based on a poll of 15 analysts implies a year-over-year (YoY) growth in revenue of 12.9%. Last year the company reported $1.44 billion in revenue for the quarter.

Expected to report EPS growth of 59.1% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,625.35 $1,440.22 12.9%
EPS $0.35 $0.22 59.1%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from Sprouts Farmers Market, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.38 $0.59 55.7% Beat
Q1, 2020 $0.55 $0.79 44.5% Beat
Q4, 2019 $0.14 $0.27 96.4% Beat
Q3, 2019 $0.19 $0.22 15.5% Beat
Q2, 2019 $0.31 $0.30 −2.6% Missed
Q1, 2019 $0.41 $0.46 11.6% Beat
Q4, 2018 $0.18 $0.19 7.0% Beat
Q3, 2018 $0.26 $0.27 4.7% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 28, 2020, the stock price reacted by falling −1.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $27.02 $26.50 −1.9% Decline
May 5, 2020 $21.76 $23.89 9.8% Increase
February 20, 2020 $15.86 $17.99 13.4% Increase
October 30, 2019 $18.99 $19.41 2.2% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.88, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.88 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Sprouts Farmers Market, Inc. is currently trading at $20.82/share, up 0.7% for the day. The company is trading at approximately 74.4% of its 52-week high of $28/share. The company’s stock price is down −21.4% since the last earnings report and down −2.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 41.75 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:SFM Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 11.33 and a forward P/E multiple of 9.93.

Sprouts Farmers Market, Inc.’s current share price also implies a price-to-book (P/B) multiple of 3.30. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 28, 2020
Stock Price (Current) $20.82
P/E Ratio 11.3x
P/E Ratio (Fwd) 9.9x
PEG Ratio 0.2
Total Debt / Total Capital 40.8%
Levered Free Cash Flow $345 million
EV / EBITDA 8.7x

Finbox

Sprouts Farmers Market, Inc. is a mid-cap stock with a market capitalization of $2.456 billion and a total enterprise value of $3.81 billion. The company operates in the Consumer Staples sector and the Food & Staples Retailing industry.

Sprouts Farmers Market, Inc., a healthy grocery store, provides fresh, natural, and organic food products in the United States. Its stores offer fresh produce, packaged groceries, meat and seafood, deli, vitamins and supplements, dairy and dairy alternatives, bulk items, baked goods, frozen foods, natural health and body care, beer and wine, and household items. As of February 20, 2020, it operated 341 stores in 22 states. Sprouts Farmers Market, Inc. was founded in 2002 and is based in Phoenix, Arizona.

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