June 29, 2023
Top 10 Stock Sprouts Farmers Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Sprouts Farmers – Top 10 Stock in S&P Mid-Cap Index
Sprouts Farmers is listed as a top 10 stock on June 29, 2023 in the market index S&P MIDCAP because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. While the company shows high growth, the stock price is high yet professional investor sentiment is low, which may be due to overly optimistic investor behavior, reflected in a low stock price value. Based on the Obermatt 360° View of 79 (top 79% performer), Obermatt assesses an overall strong buy recommendation for Sprouts Farmers on June 29, 2023.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Food Retail |
| Index | NASDAQ, S&P US Food & Beverage, S&P MIDCAP |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Sprouts Farmers Strong Buy
| 360 METRICS | June 29, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 21 |
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| GROWTH | ||||||||
| GROWTH | 97 |
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| SAFETY | ||||||||
| SAFETY | 88 |
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| SENTIMENT | ||||||||
| SENTIMENT | 45 |
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| 360° VIEW | ||||||||
| 360° VIEW | 79 |
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ANALYSIS: With an Obermatt 360° View of 79 (better than 79% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock Sprouts Farmers are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Sprouts Farmers. The consolidated Growth Rank has a good rank of 97, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 97% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 88 which means that the company has a financing structure that is safer than 88% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 21 which means that the share price of Sprouts Farmers is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 79% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 45, which means that professional investors are more pessimistic about the stock than for 55% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 79, Sprouts Farmers is better positioned than 79% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 97), and the company is safely financed (Safety Rank of 88). However, professional market sentiment is low(Sentiment Rank of 45). The negative market view on Sprouts Farmers may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Sprouts Farmers compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one hundred minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the value rank is above 60. As market sentiment is low, you should be careful with paying more than market-average for this stock and conduct further research into the company’s future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Sprouts Farmers only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 45 (better than 45% compared with alternatives), overall professional sentiment and engagement for the stock Sprouts Farmers is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Sprouts Farmers. Analyst Opinions are at a rank of 2 (worse than 98% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 50, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Sprouts Farmers. Even better, the Professional Investors rank is 81, meaning that professional investors hold more stock in this company than in 81% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 76, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 76% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 45 (less encouraging than 55% compared with investment alternatives), Sprouts Farmers has a reputation among professional investors that is below that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Sprouts Farmers Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 21 (worse than 79% compared with alternatives), Sprouts Farmers shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Sprouts Farmers. Only Price-to-Profit (also referred to as price-earnings, P/E) indicates good stock value with a rank of 65, which means that the stock price compared with what market professionals expect for future profits is lower than for 65% of comparable companies, indicating a good value concerning Sprouts Farmers's profit levels. But Price-to-Sales is 48 which means that the stock price compared with what market professionals expect for future profits is higher than for 52% of comparable companies, indicating a low value concerning Sprouts Farmers's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 36 and for dividend yield, which is lower than for 99% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 21, is a sell recommendation based on Sprouts Farmers's stock price compared with the company's operational size and dividend yields. Can we rely on only one good value indicator? Only if we know the company well. In this case, a high Price-to-Profit Rank, while Price-to-Sales and Price-to-Book are both below the market typical levels, means that the company can charge higher prices for its products and needs less capital to produce them. If this is sustainable, then Sprouts Farmers is a good investment because profits count most in enterprise valuations. The low dividend yield indicates that the company is confident it can do something with the generated cash that is more valuable than paying the profits out to the shareholders in the form of dividends. ...read more
Growth Strategy: Sprouts Farmers Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 97 (better than 97% compared with alternatives) for 2023, Sprouts Farmers shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all four indicators above average for Sprouts Farmers. Sales Growth has a value of 79, which means that, currently, professionals expect the company to grow more than 79% of its competitors. The same is valid for Profit Growth with a value of 57 and for Capital Growth with 73. In addition, Stock Returns had an above-average rank value of 83, which means they have been higher than 83% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 97, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Sprouts Farmers exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: Sprouts Farmers Debt Financing Safety very solid
| SAFETY METRICS | June 29, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 76 |
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| REFINANCING | ||||||||
| REFINANCING | 43 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 87 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 88 |
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ANALYSIS: With an Obermatt Safety Rank of 88 (better than 88% compared with alternatives) for 2023, the company Sprouts Farmers has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Sprouts Farmers is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Sprouts Farmers. Leverage is at a rank of 76, meaning the company has a below-average debt-to-equity ratio. It has less debt than 76% of its competitors. Liquidity is also good at a rank of 87, meaning the company generates more profit to service its debt than 87% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 43, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 57% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 88 (better than 88% compared with alternatives), Sprouts Farmers has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Sprouts Farmers. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Sprouts Farmers Top Financial Performance
| COMBINED PERFORMANCE | June 29, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 21 |
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| GROWTH | ||||||||
| GROWTH | 97 |
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| SAFETY | ||||||||
| SAFETY | 87 |
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| COMBINED | ||||||||
| COMBINED | 90 |
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ANALYSIS: With an Obermatt Combined Rank of 90 (better than 90% compared with investment alternatives), Sprouts Farmers (Food Retail, USA) shares have much better financial characteristics than comparable stocks. Shares of Sprouts Farmers are low in value (priced high) with a consolidated Value Rank of 21 (worse than 79% of alternatives). But they show above-average growth (Growth Rank of 97) and are safely financed (Safety Rank of 88, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 90, is a strong buy recommendation based on Sprouts Farmers's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Sprouts Farmers exhibits low value (Obermatt Value Rank of 21), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 97). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 88) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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