What Happened?
Shares of grocery store chain Sprouts Farmers Market (NASDAQ:SFM) jumped 13.7% in the pre-market session after the company reported a "beat and raise" quarter. Third quarter results blew past analysts' revenue , EBITDA, and EPS estimate. Amid what management considered robust traffic and high execution levels, the solid performance enabled SFM to raise full-year sales and profitability guidance. Zooming out, we think this quarter featured some important positives.
Is now the time to buy Sprouts? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Sprouts’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. Moves this big are rare for Sprouts and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 20.1% on the news that the company reported second-quarter earnings results. SFM provided an optimistic full-year earnings forecast, which blew past analysts' expectations. Its revenue and EPS also outperformed Wall Street's estimates during the quarter. Zooming out, we think this was a great quarter that shareholders will appreciate.
Following the results, Wall Street analysts raised the stock's rating. BMO analyst Kelly Bania upgraded the stock from Underperform to Market Perform and raised the price target from $40 to $102. The analyst added "Even if the competitive risks start to have an impact, [comparable store sales] have accelerated to a point that the company may still be able to absorb these impacts, and may still reach same-store sales targets."
Sprouts is up 160% since the beginning of the year, and at $127.80 per share, has set a new 52-week high. Investors who bought $1,000 worth of Sprouts’s shares 5 years ago would now be looking at an investment worth $6,584.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.