Is Sprouts Farmers Market (SFM) Stock Undervalued Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Sprouts Farmers Market (SFM). SFM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 13.23. This compares to its industry's average Forward P/E of 13.68. 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 12.79.
Investors should also note that SFM holds a PEG ratio of 1.39. 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 PEG compares to its industry's average PEG of 1.42. Over the past 52 weeks, SFM's PEG has been as high as 2.12 and as low as 1.28, with a median of 1.71.
Finally, we should also recognize that SFM has a P/CF ratio of 7.19. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. SFM's current P/CF looks attractive when compared to its industry's average P/CF of 9.12. SFM's P/CF has been as high as 7.99 and as low as 5.28, with a median of 6.63, all within the past year.
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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Sprouts Farmers Market, Inc. (SFM) : Free Stock Analysis Report
