Why Sprouts Farmers Market Is Rocketing Higher Today
Key Points
Sprouts grew sales by 4% as it lapped tough year-over-year comparables.
The company opened its first location in New York and plans to grow its store count from 483 to over 520 this year.
After its stock got cut in half over the last year, Sprouts bought back 2% of its total shares outstanding in Q1.
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Shares of attribute-focused, specialty grocery chain Sprouts Farmers Market (NASDAQ: SFM) are up 17% as of noon ET on Thursday following the company's excellent first-quarter earnings. While sales only inched 4% higher -- and earnings per share actually dipped 6% -- these figures outpaced Wall Street's low expectations. More importantly, management guided for full-year revenue growth of 5.5% and EPS of roughly $5.40, leaving the stock trading at just 15 times forward earnings, even after today's rise. With Sprouts' stock price already cut in half over the last year, the bar had been lowered a bit for the better-for-you grocer, and its resilience amid a challenging consumer-spending environment helped spark today's pop.
After growing sales by double-digits for six straight quarters over the last two years -- before slowing to 7% and 4% in its last two earnings reports -- Sprouts is doing reasonably well lapping these tough comparables. While Sprouts only opened six new stores in Q1, raising its total count to 483 in 25 states, it plans to open at least 34 more over the next three quarters -- all easily funded from cash on hand and cash from operations. One of these six new locations was Sprouts' first in New York, which could offer huge potential if the company can "stick its landing" as it expands into the Northeast.
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In addition to this store count growth potential, Sprouts:
- grew e-commerce sales by 10% to equal 16% of revenue
- saw private-label products also outpace overall sales growth, now equalling 26% of revenue
- repurchased 2% of its shares outstanding in Q1 alone, after its share price sank
- launched 1,500 new products so far in 2026, after creating 7,000 in 2025
This last highlight is Sprouts' "secret sauce," in my opinion, as these new product innovations are what keep customers coming back for a unique shopping experience. After identifying which new products are most popular, Sprouts often introduces higher-margin private-label versions of these innovations, offering customers unique variations of common goods at reasonable prices.
Sprouts remains one of my favorite stocks to buy right now.
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Josh Kohn-Lindquist has positions in Sprouts Farmers Market. The Motley Fool has positions in and recommends Sprouts Farmers Market. The Motley Fool recommends the following options: long January 2028 $75 calls on Sprouts Farmers Market and short January 2028 $85 calls on Sprouts Farmers Market. The Motley Fool has a disclosure policy.
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