What Happened?
Shares of grocery store chain Sprouts Farmers Market (NASDAQ: SFM) fell 25.4% in the morning session after the company reported third-quarter results that featured a revenue miss and weak guidance for the upcoming fourth quarter, which overshadowed an earnings beat. The specialty grocer's revenue came in at $2.2 billion, falling short of the consensus estimate of $2.23 billion. While its earnings per share of $1.22 topped expectations, investors focused on the weak forward-looking statements. The company guided for fourth-quarter same-store sales growth of just 1% at the midpoint, significantly below the 4.5% that analysts had anticipated. This weak outlook for a key retail metric signaled slowing momentum, sparking concern among investors.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Sprouts? Access our full analysis report here.
What Is The Market Telling Us
Sprouts’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Sprouts and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 16 days ago when the stock gained 4.2% on the news that it maintained its positive momentum as RBC Capital upgraded the stock's rating from "Sector Perform" to "Outperform."
The investment firm noted that Sprouts' shares had declined approximately 42% since their peak in June, and stated its belief that concerns about the company's recent promotional activity were "overblown." While the firm adjusted its price target down to $148 from $176, the new target still represented significant potential upside from the trading price at the time. RBC Capital also projected that Sprouts could achieve low double-digit revenue growth and low to mid-teens earnings per share growth over the medium term.
Sprouts is down 42.5% since the beginning of the year, and at $76.47 per share, it is trading 57.4% below its 52-week high of $179.53 from June 2025. Investors who bought $1,000 worth of Sprouts’s shares 5 years ago would now be looking at an investment worth $4,014.
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