Why the high growth investor may take a look at SPROUTS FARMERS MARKET INC (NASDAQ:SFM).

Our stock screener has detected a potential breakout setup on SPROUTS FARMERS MARKET INC (NASDAQ:SFM). This breakout pattern is observed when a stock consolidates following a strong upward movement. It's important to note that this pattern is based on technical analysis, and the actual breakout outcome is uncertain. However, it might be worth keeping an eye on NASDAQ:SFM.

What is the technical picture of SFM telling us.

At ChartMill, a crucial aspect of their analysis is the assignment of a Technical Rating to each stock. This rating, ranging from 0 to 10, is calculated daily by considering numerous technical indicators and properties.

Taking everything into account, SFM scores 9 out of 10 in our technical rating. Both in the recent history as in the last year, SFM has proven to be a steady performer, scoring decent points in every aspect analyzed.

• The short term is neutral, but the long term trend is still positive. Not much to worry about for now.
• When comparing the yearly performance of all stocks, we notice that SFM is one of the better performing stocks in the market, outperforming 97% of all stocks. On top of that, SFM also shows a nice and consistent pattern of rising prices.
• SFM is one of the better performing stocks in the Consumer Staples Distribution & Retail industry, it outperforms 92% of 39 stocks in the same industry.
• SFM is currently trading in the upper part of its 52 week range. The market is still in the middle of its 52 week range, so SFM slightly outperforms the market at the moment.
• In the last month SFM has a been trading in the 130.06 - 156.04 range, which is quite wide. It is currently trading in the middle of this range, so some resistance may be found above.

Our latest full technical report of SFM contains the most current technical analsysis.

Why is SFM a setup?

In addition to the Technical Rating, ChartMill provides a Setup Rating for each stock. This rating, ranging from 0 to 10, assesses the level of consolidation in the stock based on multiple short-term technical indicators. Currently, SFM has a 7 as its setup rating, indicating its current consolidation status.

Besides having an excellent technical rating, SFM also presents a decent setup pattern. Prices have been consolidating lately and the volatility has been reduced. There is a support zone below the current price at 136.74, a Stop Loss order could be placed below this zone.

Some of the high growth metrics of SFM highlighted

ChartMill assigns a High Growth Momentum Rating (HGM) to every stock. This score ranges from 0 to 10 and evaluates the different growth and profitability aspects, including accelleration, surprises and revisions. SFM scores a 6 out of 10:

Explosive Earnings Growth

• With a favorable trend in its quarter-to-quarter (Q2Q) earnings per share (EPS), SFM highlights its ability to generate increasing profitability, showcasing a 61.22% growth.
• Accelerating EPS growth for SFM: the current Q2Q growth of 61.22% exceeds the previous quarter Q2Q growth of 40.0%.
• Sales acceleration happened 3 quarters in a row.
• The 1-year EPS growth of SFM (32.86%) highlights the company's ability to consistently improve its earnings performance and suggests a positive outlook for future profitability.
• SFM has demonstrated strong q2q revenue growth of 17.53%, suggesting a favorable trend in the company's financials and indicating the potential for continued expansion.
• The sales growth of SFM is accelerating: the current Q2Q growth of 17.53% is above the previous quarter Q2Q growth of 13.57%. Sales momentum and acceleration are key for high growth systems.
• Sales growth accelerated for 3 quarters in a row.
• Over the past 3 months, analysts have adjusted their EPS Estimate for SFM with a 21.06% change. This highlights the evolving outlook on the company's EPS potential.
• SFM has a strong history of beating EPS estimates in the last 4 quarters, signaling its ability to consistently exceed market expectations. This indicates the company's strong financial performance and its potential for creating shareholder value.

Profitability & Financial Strength

• With a favorable trend in its operating margin over the past year, SFM demonstrates its ability to enhance profitability through efficient operations. This growth reflects the company's focus on optimizing its cost structure.
• SFM has experienced growth in its profit margin over the past year, reflecting improved operational performance.
• SFM has experienced notable growth in its free cash flow (FCF) over the past year, signaling improved cash generation and strong financial performance. This growth suggests the company's ability to generate excess cash for reinvestment or shareholder returns.
• SFM demonstrates a strong Return on Equity(ROE) of 28.79%. This indicates the company's ability to generate favorable returns for shareholders and reflects its efficient utilization of capital. SPROUTS FARMERS MARKET INC shows promising potential for continued success.
• With a Debt-to-Equity ratio at 0.01, SFM showcases its prudent financial management. The company's balanced approach between debt and equity reflects its commitment to maintaining a stable capital structure.

Strong Market Performance

• The Relative Strength (RS) of SFM has been consistently solid, with a current 97.33 rating. This highlights the stock's ability to exhibit sustained price strength and signifies its competitive advantage.

More ideas for high growth momentum breakouts can be found on ChartMill in our High Growth Momentum Breakout screen.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.