Sprouts Farmers Market (SFM) Is A Good Stock Despite Concerns About Margin Compression

If you're looking for a recession-resilient stock, SFM might be a good choice. Check out our research report!

Sprouts operates grocery stores that offer fresh, natural, and organic food products in the United States. As of January 03, 2021, it operated 362 stores in 23 states.

• Sprouts Farmers Market is a strong niche grocer that has seen steady revenue growth over the years.
• The company's performance and efficiency metrics stack up well against more established competitors.
• We think SFM is undervalued. ​
  

We've read a few of the recent articles about SFM and the talk is often about its margins being in potential danger due to competition etc. This has some people concerned about the company. To us, this would be concerning if the stock was expensive, but, it's not. 
 
We think SFM is a good stock at this price despite not having a great competitive advantage. Even if you’re pessimistic on margins and expect them to drop, it’s still not an overvalued stock based on its cash flows. 
  
In this report, we'll give a brief overview of the business, compare it to peers, and do two different DCF valuations to show that there is still value in SFM even if margins drop.  

​Side note: SFM has a relatively high short interest! 

*This is a premium seeking alpha article, so we can’t fully post it here.* ​

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