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Are Investors Undervaluing Sprouts Farmers Market (SFM) Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Sprouts Farmers Market (SFM). SFM is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 13.46 right now. For comparison, its industry sports an average P/E of 13.82. Over the past year, SFM's Forward P/E has been as high as 15.37 and as low as 10.38, with a median of 12.85.

SFM is also sporting a PEG ratio of 1.29. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SFM's industry has an average PEG of 1.43 right now. SFM's PEG has been as high as 2.12 and as low as 1.28, with a median of 1.72, all within the past year.

Finally, investors should note that SFM has a P/CF ratio of 7.16. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. SFM's P/CF compares to its industry's average P/CF of 9.98. SFM's P/CF has been as high as 7.99 and as low as 5.28, with a median of 6.42, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Sprouts Farmers Market is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SFM feels like a great value stock at the moment.

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