QS Research · Michael Burry's Scion Capital analyst template · 2006
Sprouts Farmers Market, Inc. (SFM)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -20% · upside +30%
The market is treating SFM as a broken grocer after the Q3 2026 comp miss and FY2026 guide cut, and at 5.1x EV/EBITDA and 9.1x P/E with net cash, a 7.4% FCF yield and $429.2M of TTM buybacks, a lot of bad news is already in the price. But current earnings are still falling: Q3 comps were -0.9%, Q4 comps are guided to (2)%-(4)% and FY2026 EPS is ~$4.80, so at today's 5.1x multiple the stock is roughly fairly valued, not a long. The +30% case needs a re-rate to the 6.7x grocery-peer EBITDA mark, which requires evidence that the comp and margin slide is temporary; the cited re-rate levers are the 53rd week, 42 net new stores and buybacks, but the only dated catalyst (Q3) has passed and the Q4/FY2026 date is not in the sources. Watch.
Key numbers
- Share price: $49.10
- Market cap: $4.53B
- Latest financial period: TTM to Sep 27, 2026
- Revenue (TTM): $9.11B
- EV / EBITDA (TTM): 5.1x
- P/E (TTM): 9.1x
- Price / book: 2.96x
The 15 boxes
- ✓ 1. Long-form business notes
Sprouts is a produce-centered specialty grocery retailer: 477 stores in 24 states as of December 28, 2025, versus 362 stores in 23 states as of January 3, 2021. FY2025 revenue was $8.81B with operating income of $686.2M, net income of $523.7M, operating cash flow of $716.0M and capex of $248.3M. Growth has come from new stores, a larger Sprouts Brand mix (just over 25% of FY2025 revenue) and a build-out of fresh distribution and meat/seafood self-distribution. Capital returns are visible in FY2025 buybacks of $471.9M versus $0 in the fiscal year ended January 3, 2021.
- ✓ 2. Competitive advantage
SFM operates in a highly fragmented grocery industry with named specialty, conventional, mass/discount, club, online and delivery competitors; the 10-K cites trademarks and trade dress as brand assets, but the risk factors stress competitors with greater financial or marketing resources and aggressive health/wellness expansion. FY2021-FY2025 XBRL shows gross profit rising from $2.38B to $3.42B, operating income from $391.7M to $686.2M and net income from $287.4M to $523.7M, with operating cash flow from $494.0M to $716.0M, but the DATA table gives no margin or return ratios. Scale is expanding (37 new stores in FY2025; more than 40 planned for 2026), while supplier and geographic concentration are dependencies, not proven advantages.
- ✓ 3. 10-Q takeaways
Q3 2026 net sales rose 5% to $2.305B, but comparable store sales fell 0.9% and gross margin slipped to 38.2%, leaving diluted EPS at $1.21 versus $1.22. Nine-month comps were down 1.2%, operating cash flow was $555.1M, and the company bought back 3.888M shares for $301.9M. Management guides Q4 2026 comps to (2.0)%-(4.0)% and diluted EPS to $0.47-$0.51, with FY2026 diluted EPS ~$4.80 on a 52-week basis; the 10-Q reports no material risk-factor changes from the 2025 10-K.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
Sign in with a QuantSignals Premium or Gold plan to read every box: each point linked to the SEC filing it came from, the bull and bear case, and the comparables. QS Research powers the signals behind FST, our autonomous trading agent.