$SFM #Sprouts #Farmers #Market #Greener #Future #NASDAQ #Stocks
Sprouts Farmers Market
Recommendation: Buy and Hold
Sprouts Farmers Market News
Sprouts opened six new stores in the third quarter and now has 356 stores in 23 states. This is in line with its oft-stated goal to increase store count by 10% a year. This will allow the company to grow sustainably without having to take on outside funding or more debt.
But is there consumer demand for more Sprouts stores going forward? I believe so, for two reasons:
- Sprouts has more room to grow in its established markets. For example, the company only has four locations in Washington state and entered the market in 2019. Compare that to Arizona, a state with a similar population (both in between 7 million and 8 million people) and urban centers, with 42 locations.
- The concept can work in the majority of states. Sprouts says that it wants to provide the value of Whole Foods (fresh produce, vegan/paleo options, etc.) but without breaking the bank. This format isn’t limited to certain regions. It may be tough to get a dozen stores in South Dakota, but the company doesn’t have a single store in many large states, giving investors reason to believe it won’t run into location growth problems anytime soon.
But what about the valuation?
Sprouts currently has a market cap of around $2.4 billion. Its trailing price-to-earnings, or P/E, is 10. Kroger (NYSE:KR), the most similar public company to Sprouts (Whole Foods and Trader Joes do not have publicly available financials), also has a P/E of 10. This indicates that investors believe Sprouts has the same growth potential as Kroger, even though the larger company already has over 3,000 stores across the United States.
One last note is that Sprouts’s forward P/E, which is based on earnings estimates over the next 12 months, is roughly 12. This means that analysts think that Sprouts’s expenses will grow faster than its revenue over the next year, likely because of pandemic-related costs. However, investors with a long-term mindset should be able to see the forest through the trees and understand that when the coronavirus eventually subsides, these expenses likely will as well.
Sprouts Farmers Market, Inc. is a food retailer.
The Company operates as a grocery store that offers fresh, natural and organic food that includes fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, body care and natural household items catering to consumers’ interest in health and wellness.
As of February 23, 2017, the Company operated 256 stores in 14 states. The Company categorizes the varieties of products it sells as perishable and non-perishable.
The perishable product categories include produce, meat, seafood, deli and bakery.
Its non-perishable product categories include grocery, vitamins and supplements, bulk items, dairy and dairy alternatives, frozen foods, beer and wine, and natural health and body care.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 23.47.
The projected lower bound is: 15.64.
The projected closing price is: 19.56.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 19 white candles and 31 black candles for a net of 12 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 32.9836. This is not an overbought or oversold reading. The last signal was a buy 5 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 41.14. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 38 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -88. This is not a topping or bottoming area. The last signal was a buy 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 13 period(s) ago.
Rex Takasugi – TD Profile
SPRTS FRMR MKT closed down -0.755 at 19.560. Volume was 47% below average (neutral) and Bollinger Bands were 36% wider than normal.
Open High Low Close Volume 20.550 20.770 19.540 19.560 5,204,607
Technical Outlook Short Term: Neutral Intermediate Term: Bearish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 20.72 20.95 22.01 Volatility: 87 129 99 Volume: 10,417,834 11,305,322 10,512,681
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
SPRTS FRMR MKT is currently 11.1% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future.
Our volume indicators reflect volume flowing into and out of SFM.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on SFM.O and have had this outlook for the last 5 periods.
Latest posts by HEFFX Australia (see all)
- British Pound: GBP/USD (GBP=X) Could Be A Volatile Day - November 23, 2020
- Euro: EUR/USD (EUR=X) Focus on Today’s Best Opportunities With Metastock - November 23, 2020
- Bitcoin: BTC/USD (BTC=X) Supply Squeeze “The Biggest Story in Bitcoin” - November 23, 2020