Sprouts Farmers Market operates as a specialty retailer of fresh, natural, and organic food in the United States. The company was founded in 2002 and is based in Phoenix, Arizona.
SFM Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Sprouts Farmers Market Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Sprouts Farmers Market Inc ranked in the 74th percentile in terms of potential gain offered. Moreover, under all the scenarios we modelled, the output consistently forecasted positive returns. As for the metrics that stood out in our discounted cash flow analysis of Sprouts Farmers Market Inc, consider:
Interest coverage, a measure of earnings relative to interest payments, is 12.63 -- which is good for besting 78.73% of its peer stocks (US stocks in the Consumer Defensive sector with positive cash flow).
Sprouts Farmers Market Inc's weighted average cost of capital (WACC) is 6%; for context, that number is higher than just 8.34% of tickers in our DCF set.
SFM's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than just 8.34% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Consumer Defensive that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as SFM, try NATR, AGRO, ABEV, COKE, and WBA.
It seems that consumers' confidence got restored in May as lockdowns were eased and businesses gradually reopened. Government stimulus helped companies weather the coronavirus crisis and improve their customer sentiments.
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