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Why Sprouts Farmers Markets, Inc. Stock Climbed 15% Last Month

By Jeremy Bowman - Updated Feb 6, 2018 at 4:59PM

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A strong preliminary earnings report boosted shares of the natural-foods grocer.

What happened

Shares of Sprouts Farmers Markets, Inc. (SFM 0.47%) were blooming last month, as the stock gained on a strong preliminary earnings report. According to data form S&P Global Market Intelligence, the stock finished the month 15% higher. 

The stock started rising after the company reported preliminary earnings on Jan. 8.

SFM Chart

SFM data by YCharts

So what 

Sprouts said that comparable sales had increased 4.6% in the fourth quarter, and that the company expected a full-year sales increase of 15.3%, comparable sales growth of 2.9%, and earnings per share slightly above its prior guidance at $0.98-$0.99 for 2017. 

Boxes full of different kinds of vegetables at a market

Image source: Getty Images.

CEO Amin Maredia said, "We are pleased to report that our strong performance continues, a direct result of our unique model offering health and value across the store, consistent execution, and focus against our strategic initiatives." In addition to strong comparable sales and beating the company's own earnings guidance, the report seemed to assuage investors that Sprouts wouldn't be derailed by the recent combination of Amazon.com and Whole Foods Market. 

Now what

With 4.6% comparable sales growth, Sprouts is outgrowing virtually all of its publicly traded rivals except for Costco Wholesale, a sign of the strength of its focus on natural foods. Also last month, Sprouts said it would expand its home delivery with a new partnership with Instacart, giving the company more exposure to the fast-growing e-commerce market, as it will offer delivery in its major markets through Instacart.

With the threat from Amazon now seeming overblown and comparable sales moving higher, Sprouts looks set to build off last year's momentum for a strong 2018. The company will deliver its complete fourth-quarter and full-year earnings report on Feb. 22. 

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Stocks Mentioned

Sprouts Farmers Market, Inc. Stock Quote
Sprouts Farmers Market, Inc.
SFM
$25.86 (0.47%) $0.12
Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
COST
$481.75 (-0.54%) $-2.62
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$113.22 (-2.78%) $-3.24

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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