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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Sprouts Farmers Market, Inc. (XNAS:SFM) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
SFM
Name:
Sprouts Farmers Market, Inc. (XNAS:SFM)
Sector:
125.80M
Industry:
Grocery Stores
CEO:
Mr. Jack Sinclair
Total Employees:
31,000
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is -10.35% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF SPROUTS FARMERS MARKET, INC.(SFM) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND GROCERY STORES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
28.73
One Month Price Target:
$28.79
Six Month Price Target :
$29.12
Likely Price in One Year's Time:
Ticker:
$29.51
Likely Trading Range Today Under (Normal Volatility)
$28.62
Price Upper limit ($) :
$28.89
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$27.15
This week:
$25.2
This month :
$21.66
Other Primary facts
Market Cap:
3.14B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
107.46M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
15.71%
-24.24%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$36.06
$32.67
$21.40
$24.79
Medium risk (<10%) entry points
Buy Call
Sell Call
$31.56
Buy Put:
Sell Put:
$30.84
$25.89
$26.62
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
SFM
Sharpe Ratio:
3.07%
Comparison:
SFM, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is -19.49% lower than the industry
& ratio is 34.53% higher than the market/S&P 500 average
Average Returns/Yield of
SFM
Daily returns:
0.09%
Weekly returns:
0.46%
Monthly returns:
1.85%
Yearly returns:
23.09%
Comparison of returns:
Average annual returns/yield (last 3 years) is -4.02% below industry average
Classification:
SFM, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.12
Statistical test of Returns:
SFM has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.72%
Weekly Volatility:
6.09%
Monthly Volatility:
12.18%
Yearly Volatility:
42.18%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.45%
Volatility in last five trading days has been -46.88% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.50%
Weekly VaR:
-12.30%
Monthly VaR:
-24.59%
How Much Can the price of
SFM
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-21%
Worst case (decline):
-85.20%
This translates to price declining to:
$22.79
This translates to price declining to:
$4.25
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
SFM is a 73.59% riskier investment compared to the market/S&P 500 & is 48.71% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 13.37% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
SFM
Beta in relation to market/S&P 500--0.40
Expected beta in 1 year's time:
0.472
Expected beta in 3 year's time:
0.668
Unlevered (debt free) Beta:
0.199
Beta in relation to Nasdaq (XNAS):
0.34
Beta in relation to all global stocks::
0.4
Beta Comparison & Analysis
Beta of competitors/peers::
0.916
Beta is -55.94% lower than peers
Average Industry Beta:
0.55
Beta is -26.57% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
29.35%
Sustainable growth rate is 46.66% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.162
Alpha is 0.45% above industry average alpha yield
Alpha is 1034% higher than market/& is unsustainably high
Analysis of Cost of Capital of
SFM
Equity cost of capital:
0.059
Equity cost of capital is -14.47% below industry mean WACC
Unlevered (without debt) cost of capital:
2.92%
Before-tax cost of debt:
0.73%
After-tax cost of debt:
0.58%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
0.58%
WACC is -28.24% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$57.38
Revenue growth rate per share of (3Y):
3.05
Annual revenue growth rate is 61.58% above the industry average
EPS:
$2.19
Expected Annual growth rate of EPS (3Y):
18.88%
Expected future EPS growth rate is 22.76% higher than the Grocery Stores industry
Free cash flow (FCF) per share:
$2.66
-
-
Debt per share
$12.71
EBITDA per share
$5.37
Valuation Analysis Today of
SFM
P/E Ratio:
12.86
P/E Ratio of Competitors/Peers:
248.55
P/E ratio is -94.82% lower than main peers & is -36.31% lower than the industry
Stock price/value with industry average P/E ratio: $44.23
SFM is -35.05% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
0.5
Price to sales ratio is -13.31% below the industry mean
P/B (Price to book value ratio):
3.05
Price to free cash flow: 10.81
Price to free cash flow ratio is 106.87% higher than the industry
Net income growth rate (3Y):
108.14%
Net income growth rate is -72.32% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
135.00%
Net debt to equity ratio:
118.23%
Debt to assets ratio:
45.57%
Net debt to assets ratio:
39.91%
Debt-to-asset ratio is -34.44% below industry average
Ability to repay debt:
Interest coverage ratio:
52.05
Interest coverage ratio is 456.12% more than industry average
Looking forward:
Debt growth rate:
-53.15%
Annual debt growth is -2594% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.01%
Analysis of Key Statistics
Correlation of price movement with the market:
0.277
Statistical significance of correlation:
SFM has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.311
Stock price is -10.98% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.311
Correlation of price movement with Nasdaq (^IXIC):
-0.004
Covariance of price movement with the market:
-0.007
Kurtosis
14.431
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
-0.57
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
SFM
Gross Profit Margin Ratio:
145%
Operating Profit Margin Ratio:
5.52%
Operating profit margin is 203.43% higher than the industry
Net Profit Margin Ratio:
145%
Effective Tax Rate:
24.13%
Effective tax rate is 27.00% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
24.65%
Return on equity (ROE) is 26.76% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
8.32%
Return on assets (ROA) is 80.26% higher than the industry
Financial Leverage:
1.8x
Current Ratio:
1.22
Current ratio is -3.18% below industry average
Cash Conversion Cycle (days):
-6.2
Cash conversion cycle is -114.72% below industry average
The remaining useful life of property plant & equipment is: 6.0 years
Stock based compensation to net income ratio:
1.79%
In-depth Efficiency Analysis
Revenue generated per employee:
198.9K
Each employee generates -53% less revenue than industry average revenue per employee
EBITDA generated per employee:
18.6K
Each employee generates -79% less EBITDA than industry average revenue per employee
Profit generated per employee:
8.0K
Each employee generates -44% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
4.1K
Each employee generates -33% less free cash flow than industry average revenue per employee
Assets/Capital per employee
76.0K
Each employee generates -33% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
SFM
GRAND CANYON EDUCATION, INC. (XNAS:LOPE)
INTER PARFUMS, INC. (XNAS:IPAR)
OLLIE'S BARGAIN OUTLET HOLDINGS, INC. (XNAS:OLLI)
THE SIMPLY GOOD FOODS COMPANY (XNAS:SMPL)
KRISPY KREME, INC. (XNAS:DNUT)
FRESHPET, INC. (XNAS:FRPT)
THE HAIN CELESTIAL GROUP, INC. (XNAS:HAIN)
HOSTESS BRANDS, INC. (XNAS:TWNK)
CELSIUS HOLDINGS, INC. (XNAS:CELH)
Current Analyst Ratings
Strong buy�25%
Buy�29%
Hold�38%
Sell�4%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
4/3/22
Revenue:
6.17B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
3.93B
2.23B
-
-
1.77B
-
122.85M
1.89B
-
11.09M
237.16M
577.00M
340.48M
249.42M
328.75M
79.33M
249.42M
Statement of Cash Flow
Date:
Period:
60.76M
Differed Income Tax :
2.29M
Stock Based Compensation :
4.46M
Change in Working Capital :
- 3272.00K
Accounts Receivables:
9.77M
Other Working Capital:
-
Other Non-Cash Items:
484.00K
Net Cash Provided by Operating Activities:
153.03M
Investments in PP&E:
- 27227.00K
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
4/3/22
2022
Q1
324.30M
-
324.30M
13.68M
272.18M
30.56M
640.71M
1.79B
368.88M
184.96M
-
-
16.10M
2.36B
-
3.00B
165.70M
154.62M
15.28M
-
203.37M
523.69M
1.37B
35.74M
1.46B
-
1.99B
110.00K
301.42M
- 1263.0K
711.71M
April 3, 2022 at 6:00:00 AM
5.82B
1.01B
3.00B
-
1.52B
1.2B
-
-
- 27227.00K
- 176.00K
-
- 45715.00K
-
- 818.00K
- 46709.00K
-
79.09M
326.10M
247.00M
153.03M
- 27227.00K
125.80M
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
SFM
2023
2024
2025
2026
2027
$29.66
$30.46
$31.29
$32.14
$33.01