Sprouts Farmers Market (SFM) Valuation After Softer Sales Guidance And New Securities Class Action Lawsuit

Sprouts Farmers Market (SFM) is back in focus after reporting softer-than-expected third-quarter 2025 comparable-store sales, cutting full-year growth guidance, and becoming the target of a new securities class action lawsuit.

See our latest analysis for Sprouts Farmers Market.

The weaker third quarter and class action filing come after a sharp reset in sentiment, with the share price at US$79.94 and a 90 day share price return of 23.41% decline. The 5 year total shareholder return of 305.99% still points to a very strong longer term run, suggesting recent momentum has faded as investors reassess growth and risk.

If this kind of volatility has you comparing options, it could be a good moment to scan fast growing stocks with high insider ownership for other ideas with different growth and ownership profiles.

With SFM trading at US$79.94, sitting on a 42.46% 1-year total return decline yet a very strong 5-year total shareholder return of 305.99%, you have to ask: is this a reset that opens the door for buyers, or are markets already assuming plenty of future growth?

Most Popular Narrative Narrative: 34.5% Undervalued

According to tripledub, the narrative fair value of US$122.01 sits well above Sprouts Farmers Market's last close at US$79.94, setting up a sizeable valuation gap to unpack.

The business quality, zero debt, 17.8% ROIC, consistent free cash flow approaching $600M annually, justifies a premium multiple, but forward earnings multiples in the low 20x range price in substantial growth. Traditional grocery retailers typically trade at mid-teens multiples, making Sprouts' premium contingent on sustained differentiation.

Read the complete narrative.

Curious what kind of revenue path and margin profile supports that higher fair value? The narrative leans heavily on expanding profitability and a richer earnings multiple. Want to see how those moving parts fit together in the model?

Result: Fair Value of $122.01 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, investors still need to watch for any sharp slowdown in comparable-store sales and fiercer competition in natural and organic offerings, which could pressure SFM's premium P/E multiple.

Find out about the key risks to this Sprouts Farmers Market narrative.

Build Your Own Sprouts Farmers Market Narrative

If you see the story differently or prefer to work through the numbers yourself, you can build your own view in just a few minutes by starting with Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Sprouts Farmers Market.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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