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Sprouts Farmers (SFM) Sees a More Significant Dip Than Broader Market: Some Facts to Know

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The latest trading session saw Sprouts Farmers (SFM - Free Report) ending at $104.91, denoting a -1.8% adjustment from its last day's close. This change lagged the S&P 500's 0.29% loss on the day. Elsewhere, the Dow lost 0.25%, while the tech-heavy Nasdaq lost 0.31%.

Heading into today, shares of the natural and organic food retailer had gained 8.83% over the past month, outpacing the Retail-Wholesale sector's gain of 4.15% and the S&P 500's gain of 1.57% in that time.

Market participants will be closely following the financial results of Sprouts Farmers in its upcoming release. The company's earnings per share (EPS) are projected to be $0.75, reflecting a 15.38% increase from the same quarter last year. At the same time, our most recent consensus estimate is projecting a revenue of $1.87 billion, reflecting an 8.9% rise from the equivalent quarter last year.

For the full year, the Zacks Consensus Estimates project earnings of $3.37 per share and a revenue of $7.5 billion, demonstrating changes of +18.66% and +9.63%, respectively, from the preceding year.

It is also important to note the recent changes to analyst estimates for Sprouts Farmers. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Sprouts Farmers currently has a Zacks Rank of #1 (Strong Buy).

In terms of valuation, Sprouts Farmers is currently trading at a Forward P/E ratio of 31.69. This represents a premium compared to its industry's average Forward P/E of 15.58.

Investors should also note that SFM has a PEG ratio of 3.04 right now. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. The Food - Natural Foods Products industry had an average PEG ratio of 1.94 as trading concluded yesterday.

The Food - Natural Foods Products industry is part of the Retail-Wholesale sector. With its current Zacks Industry Rank of 52, this industry ranks in the top 21% of all industries, numbering over 250.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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