Whole Foods Market, Inc. (WFM): Is The Fresh Market Inc (TFM) Fresh Enough For An Investment?

Specialty food retailers have been doing well recently. There has been a lot of demand for organic food, which drives sales in specialty retail stores. People are becoming increasingly health conscious, so the demand for these products is evident. Retailers such as Whole Foods Market, Inc. (NASDAQ:WFM) and The Fresh Market Inc (NASDAQ:TFM) are becoming increasingly important.

The Fresh Market Inc (NASDAQ:TFM)

A quick look at stock prices shows the growth of these specialty grocers.

TFM Chart

TFM data by YCharts

The Fresh Market Inc (NASDAQ:TFM)’s stock price has grown almost 57.4% since its IPO. Growth has happened despite problems like rising input prices, consumers’ restricted spending and the economic slowdown. In fact, Whole Foods Market, Inc. (NASDAQ:WFM)’s stock price appreciated a whopping 141.4% during the same period. Return to investors, as shown in the chart, can be easily derived if we take a look at the changes in revenue for these companies in the last few years.

TFM Revenue Annual Chart

TFM Revenue Annual data by YCharts

Both The Fresh Market Inc (NASDAQ:TFM) and Whole Foods Market, Inc. (NASDAQ:WFM) have been growing revenue at a steady pace. Though The Fresh Market Inc (NASDAQ:TFM)’s revenue is one-tenth of its peer’s revenue, the company has been trying to expand its reach considerably. It opened five new stores during the second quarter, and plans to add 21 to 22 new stores during the fiscal year.

Comparison of performances…

However, Fresh Market has not been a very convincing performer. Its recent quarter was not up to analysts’ expectations. Though earnings stood at $0.32 per share, in line with expectations, its revenue came in at $354.8 million, slightly below estimates . An increase in the number of transactions, as well as transaction size, drove revenue higher. Also, an increase in the number of stores helped The Fresh Market Inc (NASDAQ:TFM)’s top line expand.

On the other hand, Sprouts Farmer’s Market performed remarkably well. Revenue increased 45% during its first quarter, and earnings doubled to $0.10 per share. The company has been expanding since its IPO and it is being accepted well in new markets. Sprouts opened six new stores in its recent quarter .

However, it’s not only the new stores that are helping the new company’s top line grow. This is highlighted by solid same store sales growth of 10.8%, driven by increased consumer demand. Sprouts’ same store sales metric is higher than both The Fresh Market Inc (NASDAQ:TFM) (3.4%) and Whole Foods Market, Inc. (NASDAQ:WFM) (7.5%).