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Sprouts Farmers Market (SFM): Reassessing Valuation After a Sharp Three-Month Share Price Pullback

Simply Wall St · 1d ago

Sprouts Farmers Market (SFM) has been on a bumpy ride lately, with the stock sliding over the past 3 months even as revenue and earnings continue to grow at a steady mid single digit pace.

See our latest analysis for Sprouts Farmers Market.

That recent pullback, including a sharp 90 day share price return of minus 41.23 percent and a year to date share price return near minus 40 percent, has knocked momentum back, even though the five year total shareholder return of 293.11 percent still tells a strong long term growth story.

If Sprouts has you rethinking where growth might come from next, it is a good moment to explore fast growing stocks with high insider ownership.

With profits still climbing and the share price now far below analyst targets, is Sprouts quietly slipping into undervalued territory, or is the market already baking in all the sustainable growth still to come?

Most Popular Narrative Narrative: 34.5% Undervalued

According to tripledub, Sprouts Farmers Market could be worth notably more than its last close of $79.92, pointing to meaningful upside if the narrative plays out.

Sprouts trades at fair value, not a bargain. Our DCF analysis suggests intrinsic value near $122 per share, implying modest 13% upside from $108. The business quality, zero debt, 17.8% ROIC, consistent free cash flow approaching $600M annually, justifies a premium multiple, but forward earnings multiples in the low-20x range price in substantial growth.

Read the complete narrative.

Curious how steady sales growth, expanding margins, and a rich profit multiple can still argue for a discount, not a bubble. Want to see which cash flow assumptions and return profile justify that higher fair value, even after a sharp correction. The full narrative unpacks the numbers behind that call.

Result: Fair Value of $122.01 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slowing comparable store sales or intensifying competition in natural and organic offerings could quickly challenge the optimistic valuation case.

Find out about the key risks to this Sprouts Farmers Market narrative.

Build Your Own Sprouts Farmers Market Narrative

If you are not fully aligned with this view or would rather dig into the numbers yourself, you can craft a personalized narrative in minutes: Do it your way.

A great starting point for your Sprouts Farmers Market research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.