Sprouts Farmers Market (NASDAQ:SFM) reported a year-over-year (YoY) increase of 7.68% in its Q3 FY2023 revenue, reaching $1.71 billion. The company's GAAP profit per share also rose to $0.64 from $0.61 in the previous year. The results were announced Today.
Despite a significant reduction in free cash flow, down by 31.7% to $47.9 million, the company maintained a stable gross margin of 36.5%. Same-store sales also saw a boost, with a YoY increase of 3.9%. Additionally, the store count expanded by 22, bringing the total number of stores to 401.
CEO Jack Sinclair attributed these positive results to increased traffic and comparable store sales. He noted that Sprouts, known for its natural and organic products, operates in a highly competitive grocery business sector.
In this sector, high operational costs are generated due to the perishability of products and similarity of brands across multiple stores. Despite low e-commerce penetration in this non-discretionary sector, customers continue to show a preference for in-person shopping.
Looking ahead to Q4, Sprouts has issued non-GAAP earnings per share guidance of $0.44, surpassing the estimated $0.43.
InvestingPro Insights
According to InvestingPro, Sprouts Farmers Market (NASDAQ:SFM) has been experiencing accelerating revenue growth and management has been aggressively buying back shares, signaling a strong belief in the company's future. The company's high return on invested capital, combined with its ability to cover interest payments with cash flows, further underline its financial stability.
InvestingPro data reveals that Sprouts Farmers Market has a market cap of $4,250M and a P/E ratio of 16.98, which is relatively high compared to its near-term earnings growth. The company's revenue growth over the last twelve months as of Q2 2023 is 5.67%, indicating a steady increase in its top line.
In terms of price performance, the company has seen a significant price uptick over the last six months, and its stock price is at 98.92% of its 52-week high. It's worth noting that Sprouts does not pay a dividend to shareholders, which means investors must rely solely on stock price appreciation for returns.
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