As Sprouts Farmers Market, Inc. (NASDAQ:SFM) released its latest earnings announcement on 30 December 2018, it seems that analyst forecasts are fairly bearish, with earnings expected to decline by -4.8% in the upcoming year against the past 5-year average growth rate of 16%. Currently with a trailing-twelve-month profit of US$159m, the consensus growth rate suggests that earnings will drop to US$151m by 2020. Below is a brief commentary around Sprouts Farmers Market’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How is Sprouts Farmers Market going to perform in the near future?
The longer term expectations from the 19 analysts of SFM is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of SFM’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2022, SFM’s earnings should reach US$165m, from current levels of US$159m, resulting in an annual growth rate of 2.1%. This leads to an EPS of $1.45 in the final year of projections relative to the current EPS of $1.23. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 3.0% to 2.4% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Sprouts Farmers Market, I’ve put together three key aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Sprouts Farmers Market worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Sprouts Farmers Market is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sprouts Farmers Market? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.