Sprouts Farmers Market's Plunge Offers Investors A Discount (Upgrade)

2026-04-22 16:30:55 ET

The last article that I wrote about Sprouts Farmers Market, Inc. ( SFM ), was published back in July of last year. In that article, I reaffirmed the company as a ‘hold’ candidate. Even though I acknowledged that the company was achieving impressive growth when it came to revenue, profits, and store count, I argued that shares were priced at levels that were difficult to justify. I wouldn't go so far as to take a bearish stance on it. But looking back, I probably should have. Shares have plummeted 53.2% since that article came out. By comparison, the S&P 500 is up 4.5%. This plunge, it seems, has been the result of slowing growth, combined with the fact that shares were not cheap at that time. However, I would argue that the market has overreacted to this. Based on the data that's currently available, with management forecasting continued growth on the top line this year and with shares trading at levels that are attractively priced, I believe that upgrading it to a soft ‘buy’ makes a lot of sense here....

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