Is Sprouts Farmers Market (SFM) a Great Value Stock Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Sprouts Farmers Market (SFM). SFM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 13.13 right now. For comparison, its industry sports an average P/E of 13.60. Over the last 12 months, SFM's Forward P/E has been as high as 15.37 and as low as 10.38, with a median of 12.28.
Finally, investors will want to recognize that SFM has a P/CF ratio of 6.73. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. SFM's current P/CF looks attractive when compared to its industry's average P/CF of 9.26. Over the past 52 weeks, SFM's P/CF has been as high as 7.99 and as low as 4.90, with a median of 6.07.
Value investors will likely look at more than just these metrics, but the above data helps show that Sprouts Farmers Market is likely undervalued currently. And when considering the strength of its earnings outlook, SFM sticks out at as one of the market's strongest value stocks.
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