Sprouts (SFM) Q3 Earnings Report Preview: What To Look For

Jabin Bastian /
2023/10/30 3:11 am EDT

Grocery store chain Sprouts Farmers Market (NASDAQ:SFM) will be reporting earnings tomorrow morning. Here's what investors should know.

Last quarter Sprouts reported revenues of $1.69 billion, up 6.06% year on year, in line with analyst expectations. It was a decent quarter for the company, with revenue and EPS beating analysts' estimates.

Is Sprouts buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Sprouts's revenue to grow 5.65% year on year to $1.68 billion, in line with the 5.39% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.62 per share.

Sprouts Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company missed Wall St's revenue estimates twice over the last two years.

Looking at Sprouts's peers in the non-discretionary retail segment, only Costco has so far reported results, delivering top-line growth of 9.5% year on year, and beating analyst estimates by 1.25%. The stock traded up 1.8% on the results.

Read our full analysis of Costco's earnings results here.

Triggered by the Federal Reserve's hawkish stance on interest rates, shares of technology companies have been facing sell-off since 2022, and while some of the non-discretionary retail stocks have fared somewhat better, they have not been spared, with share price declining 5.04% over the last month. Sprouts is up 5.12% during the same time, and is heading into the earnings with analyst price target of $35.8, compared to share price of $44.15.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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The author has no position in any of the stocks mentioned.