We came across a bullish thesis on Sprouts Farmers Market, Inc. on Horizons Investing’s Substack by Cade. In this article, we will summarize the bulls’ thesis on SFM. Sprouts Farmers Market, Inc.’s share was trading at $65.56 as of February 10th. SFM’s trailing and forward P/E were 12.77 and 11.70 respectively according to Yahoo Finance.
Sprouts Farmers Market (SPR) is a health-focused grocery chain headquartered in Phoenix, Arizona, operating 464 stores across 23 states as of Q3 2025, with a recent expansion into New York. Originating from Henry Boney’s 1943 fruit stand, the company has evolved through multiple acquisitions and rebrandings, ultimately going public in 2013.
Under CEO Jack Sinclair, a veteran with 35 years of grocery industry experience, and CFO Curtis Valentine, Sprouts has refocused on its core mission of providing affordable, locally sourced, organic foods. Management emphasizes disciplined execution, cost control, and customer loyalty initiatives, highlighted by a newly implemented nationwide loyalty program, which has seen strong adoption and is expected to drive future growth. The board has also authorized a $1 billion share repurchase program, providing optionality for capital allocation.
Sprouts differentiates itself with a smaller, efficient store footprint averaging 23,000 square feet, placing produce centrally to drive engagement, and leveraging relationships with local suppliers to achieve higher margins than traditional grocers—7.7% operating margins versus 4% at Walmart and 3.8% at Costco—while keeping prices competitive. The company has posted strong growth in both brick-and-mortar and e-commerce channels, with Q3 2025 online revenue up 20% year-over-year. Same-store sales remain resilient, showing 7% growth over a two-year horizon despite a softening consumer backdrop.
Financially, Sprouts trades at 13.5x trailing P/E and 12.6x EV/EBIT, with a clean balance sheet and manageable debt. Base-case projections assume 7% annual store growth, 3% same-store sales growth, and modest share repurchases, driving 12% EPS growth to $9.16 by 2031. A more bullish scenario, incorporating higher growth and margin expansion, could push EPS to $20.3, implying a potential 5x return. Risks are limited to slower store expansion or same-store sales growth, making Sprouts an attractive investment with strong upside potential over the next five years.
Previously, we covered a bullish thesis on Sprouts Farmers Market, Inc. (SFM) by Stock Picker’s Corner in February 2025, which highlighted the company’s strong gross profit margins, efficient distribution network, localized model, and potential strategic catalysts including a takeover or bolt-on acquisition. SFM’s stock price has depreciated by approximately 61.18% since our coverage due to consumer demand pressures. Cade shares a similar bullish perspective but emphasizes Sprouts’ nationwide expansion, disciplined management under Jack Sinclair, and the new loyalty program as key growth drivers.
Sprouts Farmers Market, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 53 hedge fund portfolios held SFM at the end of the third quarter which was 54 in the previous quarter. While we acknowledge the risk and potential of SFM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SFM and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
