The Fresh Market (NASDAQ: TFM) has experienced quite a bit of volatility over the past 12 months, fluctuating in the range of $38-$57 per share. In November, The Fresh Market dropped by as much as 21% to around $39 per share because of disappointing third-quarter earnings results and a sluggish full-year outlook.

Since then, its shares have stayed within this price range. At this price level, The Fresh Market is much cheaper than its peers, including Whole Foods Market (NASDAQ: WFM) and Sprouts Farmers Market (NASDAQ: SFM). Let's take a closer look to see if The Fresh Market is a compelling opportunity now.

The Fresh Market and Whole Foods both reduced earnings guidance
The Fresh Market has been focusing on delivering high-quality and fresh perishable products to customers, operating more than 140 neighborhood grocery stores.

In the third quarter, the company reported 13.4% growth in sales with 3.1% growth in its comparable-store sales. Its earnings per share came in at $0.23, missing analysts' estimates of $0.26. Moreover, the management reduced full-year earnings guidance from $1.50-$1.55 to $1.42-$1.47. The lower guidance was caused by the ongoing slowdown in consumer activity, beginning in October. 

Whole Foods Market also experienced similar challenges, revising its guidance for the full year 2014. It expected to increase its sales by 11%-13% along with  5.5%-7% growth in comparable-store sales. Whole Foods reduced its earnings guidance from a range of $1.69-$1.72 to a range of $1.65-$1.69 per share. The reason Whole Foods Market set lower guidance was increased competition in the fresh- and organic-food retailing industry, strategic price-matching initiatives, weak consumer confidence, and strategic price matches.

Only Sprouts Farmers Market remained bullish
Sprouts Farmers Market, on the other hand, got bullish about its full-year outlook. It increased the full-year comparable-store sales growth from 8.5%-9% to 9%-9.5%, with sales growth of 20%-21%. The strong confidence in its near-term outlook was led by its ongoing successful store expansion and increasing awareness of the Sprouts brand across regions.

Because of the significant growth outlook, Sprouts Farmers Market is priced quite expensively in the stock market, at more than 68 times its forward earnings. If the expected growth is factored into the valuation, its PEG ratio is nearly 3.1. Whole Foods Market has a much lower PEG ratio at only 1.7. The Fresh Market is the cheapest valued with a PEG of only 1.4.

Looking forward, The Fresh Market will continue to invest to develop scale and build a brand to expand The Fresh Market nationally. Specifically in Houston, it made a large strategic investment with a four-store lease transaction. The sales in those four stores are quite solid, as customers felt satisfied with the shopping experience. By leveraging targeted promotions and increasing investment in advertising, The Fresh Market expected to increase brand awareness and the adoption rate by customers in this area.

My Foolish take
The Fresh Market is still growing its revenue and comparable-store sales at decent rates. However, with the increased competition in the organic-food retail industry and weak consumer confidence, the short-term slowdown is inevitable. In the long run, with the expanding store footprint, growing trend toward healthier and organic foods, and the most reasonable earnings valuation ratio, The Fresh Market could be a good long-term pick in a specialty-food retail portfolio.

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John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends The Fresh Market and Whole Foods Market. The Motley Fool owns shares of Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.