Is Sprouts Farmers Market (SFM) Pricing Look Attractive After Recent Share Price Pullback
- If you are wondering whether Sprouts Farmers Market at about US$74.73 is starting to look attractive or stretched, this article will walk through what that price might really imply about value.
- The stock has seen a 6.2% decline over the last 7 days, a 10.5% decline over the last 30 days, and is down 7.3% year to date, even though the 3 year return is 134.9% and the 5 year return is 270.1%. This can change how the market is thinking about risk and opportunity.
- Recent coverage around Sprouts Farmers Market has focused on how investors are reassessing grocery and specialty food retailers, with attention on how pricing, store formats, and consumer preferences affect long term expectations. This context helps explain why a stock with a 46.7% decline over the past year can still carry strong multi year returns and mixed sentiment.
- On our checks, Sprouts Farmers Market currently scores 5 out of 6 on our valuation checklist, indicating it screens as undervalued on most of the metrics we use. You can see the detailed breakdown in our valuation score of 5/6. Next we will compare traditional valuation approaches, then finish by looking at a broader way to think about what this price might mean for long term investors.
Find out why Sprouts Farmers Market's -46.7% return over the last year is lagging behind its peers.
Approach 1: Sprouts Farmers Market Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model takes projected future cash flows and discounts them back to what they might be worth in today’s dollars. For Sprouts Farmers Market, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $.
The latest twelve month free cash flow is about $446.4 million. Analysts and internal estimates then project this to $845.4 million by 2030, with interim annual projections such as $509.6 million in 2026 and $671.2 million in 2028. These estimates are discounted back to today using Simply Wall St’s assumptions. This produces an intrinsic value estimate of about $206.69 per share.
Compared with the current share price of about $74.73, the DCF output implies the shares trade at a 63.8% discount to this intrinsic value. On this model, the stock screens as materially undervalued.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Sprouts Farmers Market is undervalued by 63.8%. Track this in your watchlist or portfolio, or discover 883 more undervalued stocks based on cash flows.
Approach 2: Sprouts Farmers Market Price vs Earnings
P/E is a useful check for profitable companies because it links what you pay today to the earnings the business is already generating. A higher P/E usually reflects higher expected growth or lower perceived risk. A lower P/E can suggest more modest expectations or higher uncertainty.
Sprouts Farmers Market currently trades on a P/E of about 14.17x. That sits below the Consumer Retailing industry average of 23.49x and also below the peer average of 20.78x. On simple comparisons, the stock looks cheaper than many similar companies.
Simply Wall St’s Fair Ratio for Sprouts Farmers Market is 17.42x. This is a proprietary P/E estimate that aims to capture what might be reasonable for this specific company, based on factors like its earnings growth profile, industry, profit margins, market cap and identified risks. Because it is tailored to the company, the Fair Ratio can be more informative than broad peer or industry averages, which may mix businesses with very different growth and risk characteristics.
With the current P/E of 14.17x sitting below the Fair Ratio of 17.42x, this approach suggests the shares screen as undervalued on earnings.
Result: UNDERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1446 companies where insiders are betting big on explosive growth.
Upgrade Your Decision Making: Choose your Sprouts Farmers Market Narrative
Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St’s Community page you can use Narratives to link your view of Sprouts Farmers Market’s story to your own revenue, earnings and margin forecasts, compare the Fair Value those assumptions produce with the current price to help decide whether to act, and see that these Narratives update automatically when new earnings or news arrive. This is why one investor currently models fair value at about US$122 per share while another comes out closer to US$124, reflecting different expectations even when they are looking at the same business.
Do you think there's more to the story for Sprouts Farmers Market? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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