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Sprouts Farmers Market, Inc. (NASDAQ:SFM) saw a significant share price rise of 21% in the past couple of months on the NASDAQGS. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Sprouts Farmers Market’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Is Sprouts Farmers Market Still Cheap?
According to our valuation model, Sprouts Farmers Market seems to be fairly priced at around 17% below our intrinsic value, which means if you buy Sprouts Farmers Market today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $184.42, then there’s not much of an upside to gain from mispricing. Furthermore, Sprouts Farmers Market’s low beta implies that the stock is less volatile than the wider market.
View our latest analysis for Sprouts Farmers Market
Can we expect growth from Sprouts Farmers Market?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 50% over the next couple of years, the future seems bright for Sprouts Farmers Market. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in SFM’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on SFM, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.