How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Sprouts Farmers (SFM) ten years ago? It may not have been easy to hold on to SFM for all that time, but if you did, how much would your investment be worth today?
Sprouts Farmers' Business In-Depth
With that in mind, let's take a look at Sprouts Farmers' main business drivers.
Sprouts Farmers Market, Inc., which operates in a highly fragmented grocery store industry, has a unique model that features fresh produce, foods section, and a vitamin department focused on overall wellness. Moreover, the company has been diversifying its offerings to meet changing preferences of consumers, who are looking for more health and wellness products. These products are generally plant-based, gluten-free, keto-friendly, and grass-fed. The company has been focusing on natural and organic food, which is one of the fastest growing segments in the industry.
This Phoenix, AZ-based company is an everyday healthy grocery store. As of Dec. 29, 2024, the company operates about 440 stores in 24 states. The company classifies products into perishable and non-perishable categories. While perishable product categories (57.3% of 2024 sales mix) include produce, meat, seafood, deli, bakery, floral and dairy and dairy alternatives; non-perishable product categories (42.7% of 2024 sales mix) include grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care.
KeHE Distributors is the company’s main supplier of dry grocery and frozen food products, and accounts for approximately 47% of total purchases in fiscal 2023. Another 3% of total purchases in fiscal 2023, were made through secondary supplier, United Natural Foods Inc. Primary supplier of meat and seafood accounted for approximately 14% of total purchases.
The company's stores are generally located in a variety of mid-sized and larger shopping centers, lifestyle centers and in certain cases, independent single-unit, stand-alone developments.
Bottom Line
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Sprouts Farmers, if you bought shares a decade ago, you're likely feeling really good about your investment today.
According to our calculations, a $1000 investment made in April 2015 would be worth $5,175.73, or a gain of 417.57%, as of April 30, 2025, and this return excludes dividends but includes price increases.
The S&P 500 rose 163.94% and the price of gold increased 164.96% over the same time frame in comparison.
Looking ahead, analysts are expecting more upside for SFM.
Shares of Sprouts Farmers have risen and outpaced the industry year to date. The company’s focus on product innovation, emphasis on e-commerce, expansion of private label offerings and targeted marketing with everyday great pricing bodes well. It has been lowering operational complexity, optimizing production, improving in-stock position and updating to smaller format stores. These efforts helped post better-than-expected fourth-quarter 2024 results, wherein both the top and the bottom lines grew year over year. Buoyed by the performance, Sprouts Farmers provided a decent 2025 view. The company expects net sales to rise between 10.5% and 12.5% with comps anticipated to increase in the range of 4.5-6.5%. SFM’s strong sales growth, margin expansion and disciplined financial management position it as a compelling investment opportunity.
Shares have gained 10.98% over the past four weeks and there have been 3 higher earnings estimate revisions for fiscal 2025 compared to none lower. The consensus estimate has moved up as well.
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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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