Yahoo Finance Was Sprouts Farmers Market, Inc.’s (NASDAQ:SFM) Earnings Growth Better Than The Industry’s?
For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Sprouts Farmers Market, Inc.’s (NASDAQ:SFM) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Check out our latest analysis for Sprouts Farmers Market
Could SFM beat the long-term trend and outperform its industry?
SFM’s trailing twelve-month earnings (from 30 September 2018) of US$186m has jumped 37% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 19%, indicating the rate at which SFM is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at whether it is merely due to industry tailwinds, or if Sprouts Farmers Market has experienced some company-specific growth.
In terms of returns from investment, Sprouts Farmers Market has invested its equity funds well leading to a 29% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 12% exceeds the US Consumer Retailing industry of 7.5%, indicating Sprouts Farmers Market has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Sprouts Farmers Market’s debt level, has declined over the past 3 years from 18% to 17%.
What does this mean?
Though Sprouts Farmers Market’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Sprouts Farmers Market to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for SFM’s future growth? Take a look at our free research report of analyst consensus for SFM’s outlook.
Financial Health: Are SFM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
