Sprouts Farmers Market, Inc. SFM is scheduled to report second-quarter 2018 results on Aug 2. In the trailing four quarters, this provider of fresh, natural, and organic food products has outperformed the Zacks Consensus Estimate by an average of 15%. In the last reported quarter, the company reported positive earnings surprise of 2%. Investors are counting on another beat by Sprouts Farmers in the to-be-reported quarter.
How Are Estimates Faring?
After registering a bottom-line increase of about 52% in the first quarter of 2018, Sprouts Farmers is likely to record year-over-year growth of roughly 10% in the second quarter. This is quite evident from the Zacks Consensus Estimate for the quarter under review, which is pegged at 32 cents compared with 29 cents reported in the year-ago quarter. We note that the Zacks Consensus Estimate has decreased by a penny in the last 30 days.
Analysts polled by Zacks now project revenues of $1,319 million, up approximately 11% from the year-ago quarter. We note that total revenue of this Phoenix, AZ-based company had increased 14% in the last reported quarter.
Out of the trailing seven quarters, the company’s earnings surpassed the consensus mark in the five quarters, while sales surpassed the same in six. Let’s delve deeper and find out the factors impacting the results.
Factors Holding Key to Sprouts Farmers’ Performance
In an effort to expand its customer base, management has been taking several initiatives. The company has launched Sprouts.com website and mobile app in February to help customers experience hassle-free shopping. Moreover, the company has partnered with Instacart to offer same-day delivery to customers.
Further, management plans to launch more than 200 new items in 2018. The company is trying all means to provide ready-to-eat, ready-to-heat, and ready-to-cook items to customers. Apart from these, the company is trying to expand private-label offerings in departments under the Sprouts Market Corner Deli, The Butcher Shop at Sprouts and Sprouts Fish Market brands.
However, softer-than-expected comparable store sales (comps) and deceleration in growth rate of the same during the first quarter raises a bit of concern. Comps rose 2.7% in the first quarter, following an increase of 4.6% recorded in the preceding two quarters. Analysts polled by Zacks envision comps growth of 2.5% during the second quarter. The company’s discontinuation of Amazon Prime Now home-delivery partnership and transition to Instacart is likely to impact comps.
Sprouts Farmers Market, Inc. Price, Consensus and EPS Surprise
Sprouts Farmers Market, Inc. Price, Consensus and EPS Surprise | Sprouts Farmers Market, Inc. Quote
What the Zacks Model Unveils?
Our proven model does not conclusively show that Sprouts Farmers is likely to beat estimates this quarter. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Sprouts Farmers has a Zacks Rank #3 but an Earnings ESP of -1.03%, which makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
3 Stocks With Favorable Combination
Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Pinnacle Foods PF has an Earnings ESP of +4.66% and a Zacks Rank #2.
US Foods Holding USFD has an Earnings ESP of +1.40% and a Zacks Rank #3.
Kellogg K has an Earnings ESP of +0.29% and a Zacks Rank #3.
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