What Happened: Shares of grocery store chain Sprouts Farmers Market (NASDAQ:SFM) jumped 15.2% in the afternoon session after the company reported first-quarter results with same-store sales above expectations, leading to a revenue and, ultimately, an EPS beat. Sprouts's optimistic earnings forecast for the next quarter and the full year were impressive, which beat analysts' expectations. Zooming out, we think this was a great quarter that shareholders will appreciate.
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What is the market telling us: Sprouts's shares are not very volatile than the market average and over the last year have had only 2 moves greater than 5%. Moves this big are very rare for Sprouts and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 2 months ago, when the stock gained 7.8% on the news that the company reported fourth-quarter results that exceeded analysts' EPS forecasts despite posting revenue in line with expectations. The company's higher profitability was driven by its better-than-expected same-store sales growth (less capital-intensive incremental revenue) and lower-than-expected new store openings (capital-intensive incremental revenue). Furthermore, its same-store sales growth and earnings forecast for the full year exceeded Wall Street's forecasts. Overall, this was a good quarter that should please shareholders.
Sprouts is up 47.7% since the beginning of the year. Investors who bought $1,000 worth of Sprouts's shares 5 years ago would now be looking at an investment worth $3,228.