Sprouts Farmers Market Inc

Sprouts Farmers Market (SFM) is a supermarket chain focusing on fresh, natural, and organic products. The company has strong operating margins, attractive returns on capital, and excellent new store economics. However, after strong revenue growth and rising earnings estimates through April 2025, SFM's stock price collapsed when growth slowed in the second half of 2025. Today, SFM trades at a low-teens multiple of forward earnings, and we are comfortable holding a mid-sized position, but we have trimmed our holdings due to the recent performance decline.

Sprouts Farmers Market (SFM) is a supermarket chain focusing on fresh, natural, and organic products. The company has strong operating margins, attractive returns on capital, and excellent new store economics. Through April 2025, SFM’s stock performed extremely well in concert with strong revenue growth and rising earnings estimates. Today, SFM trades at a low-teens multiple of forward earnings and we are comfortable holding a mid-sized position.

Sprouts Farmers Market (SFM) is a supermarket chain focusing on fresh, natural, and organic products. The company has strong operating margins, attractive returns on capital, and excellent new store economics. Through April 2025, SFM’s stock performed extremely well in concert with strong revenue growth and rising earnings estimates. Today, SFM trades at a low-teens multiple of forward earnings and we are comfortable holding a mid-sized position.

Sprouts Farmers Market (SFM) is a supermarket chain focusing on fresh, natural, and organic products. The company has strong operating margins, attractive returns on capital, and excellent new store economics. Through April 2025, SFM’s stock performed extremely well in concert with strong revenue growth and rising earnings estimates. As SFM’s valuation increased, we trimmed our position in late 2024 and early 2025. Then, when growth slowed in the second half of 2025, SFM’s share price collapsed. Today, SFM trades at a low-teens multiple of forward earnings and we are comfortable holding a mid-sized position.

Sprouts Farmers Market, Inc. (SFM) is a specialty grocery retailer focused on fresh, natural, and organic foods. Its unique health-focused stores built around its farm-stand heritage differentiate it from conventional grocers and position it to capitalize on the secular consumer shift toward better-for-you food. The company is executing a long-term ~10% store growth algorithm, including into underpenetrated markets across the Northeast and Midwest.

Sprouts Farmers Market (SFM) is a supermarket chain focusing on fresh, natural, and organic products. The company has strong operating margins, attractive returns on capital, and excellent new store economics. Sprouts accelerated its unit growth from 12 stores a year to 33 stores in 2024 on a base of roughly 400 stores – very attractive unit economic growth. Through April of this year, SFM’s stock performed extremely well in concert with strong operating results and rising earnings estimates. However, sales growth, and the SFM share price, have lagged since, prompting us to begin trimming our position and taking gains in the third quarter of 2024 as the company’s valuation entered the upper end of our 'range of reasonableness.'

Sprouts Farmers Market, the specialty grocery store chain focused on fresh produce and low cost better-for-you products, has been an outstanding performer. Our first purchase of SFM was made in the summer of 2019 at $17 and change. We saw plenty of room for expansion within the large and attractive natural and organic food segment of the grocery industry, and believed the depressed multiple offered an adequate margin of safety. Since that initial purchase, Sprouts has grown its store base from 320 stores to 440, and it plans to continue growing its store count by roughly 10% a year. Same store sales growth hit 7.6% in 2024. We are maintaining a right-sized position as the company has substantial operating momentum.

Sprouts Farmers Market and Sanlorenzo posted modest gains of approximately 3%. Sprouts, a USD-denominated position, continues to represent a significant allocation within the portfolio.

Sprouts Farmers Market (SFM) is a grocer focusing on fresh, natural and organic products. The company has best-in-class margins, attractive returns on capital and great new store economics. Sprouts accelerated its unit growth from 12 stores a year to 33 stores in 2024 on a base of roughly 400 stores. Over the past year, SFM’s stock has performed extremely well after reporting consistently strong operating results and from a low initial valuation. Although SFM’s share price has increased faster than bottom line results, we believe SFM still trades in the 'range of reasonableness' for a high-quality, non-cyclical franchise that can reinvest capital at attractive rates of return.

Sprouts Farmers Market (SFM) continues to perform well, posting strong Q1 2025 results with net sales, comparable store sales, and diluted EPS growth increasing by 18.7%, 11.7%, and 61.6%, respectively. The company is executing at a high level, with improving gross and EBIT margins. Management projects at least 35 new store openings for FY2025, which is achievable and supports their growth strategy. SFM benefits from current trends in healthy living and wellness, with a potential store count of 1,200 in the US. Despite concerns over elevated valuation multiples, the growth in sales and earnings justifies the current valuation, leading us to maintain our position.