A month has gone by since the last earnings report for Sprouts Farmers (SFM). Shares have added about 7.8% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Sprouts Farmers due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Sprouts Farmers Market, Inc. before we dive into how investors and analysts have reacted as of late.
Sprouts Farmers Q3 Earnings Beat, Comparable Store Sales Moderate
Sprouts Farmers Market, Inc. reported its third-quarter 2025 results, wherein the top line fell short of the Zacks Consensus Estimate, while the bottom line beat the same. Decent comparable sales, positive traffic trends, accelerating unit growth and strong e-commerce performance positively impacted the quarterly performance. However, management acknowledged that the trends in comparable store sales moderated, reflecting challenging year-over-year comparisons and signs of consumer softness.
SFM’s Quarterly Performance: Key Metrics and Insights
The well-known grocery retailer reported quarterly earnings of $1.22 per share, surpassing the Zacks Consensus Estimate of $1.17. The bottom line rose from 91 cents in the same period last year.
Net sales of this Phoenix, AZ-based company reached $2,200.4 million, falling short of the Zacks Consensus Estimate of $2,229 million. The figure increased 13% year over year. The growth was driven by sales from new stores and a jump in comparable store sales.
Comparable store sales rose 5.9% during the quarter under review. Moreover, the growth rate has decelerated from 10.2% and 11.7% increases registered in the second and first quarters, respectively. We note that e-commerce sales grew 21% and represented 15.5% of total sales in the quarter.
A Sneak Peek Into SFM’s Margins
The gross profit rose 14.9% year over year to $851.1 million in the quarter, while the gross margin expanded 60 basis points to 38.7% from the prior-year quarter. Better inventory management and improved shrink supported margin growth. Sprouts Farmers reported operating income of $157.4 million, up from $122.5 million reported in the year-ago period. The operating margin expanded 90 basis points to 7.2%.
SG&A expenses increased 12.6% year over year to $653.3 million. However, as a percentage of net sales, the metric leveraged 13 basis points to 29.7% owing to lower compensation expenses, partly offset by increased benefit costs and expenses tied to new store openings.
Sprouts Farmers’ Store Update
During the quarter, Sprouts Farmers opened nine new stores, taking the total count to 464 stores in 24 states as of Sept. 28, 2025. It plans to open 37 new stores in 2025. Management anticipates opening more stores in 2026 than in 2025 and remains confident in achieving the targeted 10%-unit growth by 2027.
SFM’s Financial Health Snapshot
Sprouts Farmers ended the quarter with cash and cash equivalents of $322.4 million, long-term debt and other finance obligations of roughly $53.4 million, and stockholders’ equity of $1,434.6 million. During the quarter, the company repurchased 0.4 million shares for a total investment of $50 million under its new $1 billion share repurchase program. SFM has no outstanding borrowings on its $600 million revolving credit facility.
Sprouts Farmers generated cash from operations of $577.5 million and spent $194 million in capital expenditures, net of landlord reimbursement, year to date through Sept. 28, 2025. Management continues to anticipate capital expenditures (net of landlord reimbursements) in the range of $230-$250 million for 2025.
What to Expect From Sprouts Farmers in Fiscal 2025?
For the fourth quarter of 2025, Sprouts Farmers expects flat to 2% growth in comparable store sales. It envisions adjusted earnings in the band of 86-90 cents a share compared with 79 cents reported in the year-ago period.
Sprouts Farmers now anticipates 2025 net sales growth of 14% and comparable store sales growth of 7%. The company had earlier projected net sales growth of 14.5% to 16% and comparable store sales growth of 7.5% to 9%.
Management has guided earnings before interest and taxes between $675 million and $680 million for 2025.
The company now foresees full-year earnings between $5.24 and $5.28 per share, indicating growth from $3.75 reported in 2024. SFM had earlier guided earnings in the band of $5.20-$5.32 per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -8.89% due to these changes.
VGM Scores
Currently, Sprouts Farmers has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a score of A on the value side, putting it in the top 20% for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Sprouts Farmers has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Sprouts Farmers Market, Inc. (SFM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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