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IPO Report: Sprouts Farmers Markets (SFM)

By  +Follow July 31, 2013 12:02PM
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Business

Sprouts Farmers Markets ($SFM) is a specialty food retailer that competes with Whole Foods (WFM) , Natural Grocers by Vitamin Cottage (NGVC) , Trader Joes and some Target markets.  SFM stores are clustered in the southwest.

As of July 19, 2013, SFM had 163 stores located in eight states.

SIx other IPOs were scheduled for the week of July 29. The full IPO calendar can be found at IPOpremium.

SFM is based in Phoenix, AZ, and scheduled a $278 million IPO with a market capitalization of $2.16 bilion at a price point mid-range of $15, for Thursday, August 1. 2013.

S-1 filed July 22, 2013

Manager, Joint Managers:  Goldman; Credit Suisse; BofA Merrill
Co-Managers:  Apollo Global; Barclays;Deutsche; UBS; Guggenheim; Wolfe Research Securities


Valuation

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

Profit

annualizing Q1 ’13

Cap (mm)

Sls

Erngs

BkVlue

TanBV

Margin

Sprouts Farmers Markets (SFM)

$2,160

0.9

27.0

6.2

-10.6

3.5%

Whole Foods (WFM)

$20,440

1.7

36.0

5.6

7.1

4.7%

Natural Grocers by Vitamin Cottage (NGVC)

$807

1.9

62.7

10.2

10.3

3.0%

Glossary

SFM is priced at a price-to-sales and P/E discount relative to WFM and NGVC.

Conclusion

Buy SFM on the IPO.

Half the stores were not Sprouts Stores

In 2002, Sprouts Farmers Markets, LLC, an Arizona limited liability company opened the first Sprouts Farmers Market store in Chandler, Arizona. In 2011, SFM was formed when Sprouts Arizona combined with Henry’s Holdings, LLC,  which operated 35 Henry’s Farmers Markets stores and eight Sun Harvest Market stores. 

The Henry’s Transaction was led by investment funds affiliated with, and co-investment vehicles managed by, Apollo Management VI, L.P. The Apollo Funds are affiliates of Apollo Global Management, LLC.  In May 2012, SFM acquired Sunflower Farmers Market, Inc., which operated 37 Sunflower Farmers Market stores.

There were 80 non-Sprout stores which are now being marketed as ‘Sprout’ stores, out of 154 total stores as March 31, 2013.

Seasonality

SFM’s business is subject to modest seasonality. Average weekly sales fluctuate throughout the year and are typically highest in the first half of the fiscal year. Produce, which contributes 25% of net sales, is generally more available in the first six months of the fiscal year due to the timing of peak growing seasons.

Competition

Competition includes conventional supermarkets such as Kroger and Safeway, as well as other food retailers such as Whole Foods, Natural Grocers by Vitamin Cottage and Trader Joe’s.  In some markets Target is also a competitor.

5% stockholders pre-IPO

Apollo Funds, 52%
SFM Liquidating Trust, 36%
KMCP Grocery Investors, LLC, 7%

Use of proceeds

SFM expects to net $248 million from the IPO from selling 17.7 million shares.  Shareholders expect to sell 797,785 shares.

Proceeds are allocated to repay debt.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for SFM
Megan Dean
15 Sep 14 07:18:29
RT @NASDAQ: #LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LdjKEnFK5e
Blazing Penny Plays
15 Sep 14 06:11:14
AZFL .0056 CURRENT MARKET VALUE $.0991 AZFL owns Land-Fazenda Jatuarana valued at $46,983,989 $AZFL $GPS $VIIC $SFM http://t.co/uZLWFZMzhb
Blazing Penny Plays
14 Sep 14 19:08:36
AZFL CURRENT MARKET VALUE $.0991 AZFL owns Land-Fazenda Jatuarana valued at $46,983,989 $AZFL $GPS $VIIC $SFM http://t.co/N7Qvpqb30w
Eric Diaz
14 Sep 14 18:53:05
RT @NASDAQ: #LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LdjKEnFK5e
William Aaron Bias
13 Sep 14 11:13:28
Sprouts Farmers Market: A 6 Point Inspection--http://t.co/his18BZ1Po $sfm $wfm #organicfood #grocery #groceries #healthy #trendy #food
Fields Jackson, Jr
13 Sep 14 06:32:20
RT @NASDAQOMX: #LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LsbsQ8SpBc
Ralphopotomia
12 Sep 14 21:55:03
RT @NASDAQ: #LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LdjKEnFK5e
Marco
12 Sep 14 18:47:35
RT @NASDAQ: #LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LdjKEnFK5e
Thomas G BELIEVE
12 Sep 14 16:42:10
RT @NASDAQ: #LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LdjKEnFK5e
pam kelso
12 Sep 14 15:27:13
RT @NASDAQ: #LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LdjKEnFK5e
SproutsFarmersMarket
12 Sep 14 15:09:58
RT @NASDAQ: #LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LdjKEnFK5e
allgringo
12 Sep 14 14:52:13
RT @NASDAQ: #LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LdjKEnFK5e
DANIEL CRUZZ
12 Sep 14 14:22:26
RT @NASDAQ: #LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LdjKEnFK5e
Day Trade Alerts
12 Sep 14 14:19:29
RT @NASDAQ: #LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LdjKEnFK5e
Ely Bahiana
12 Sep 14 14:18:45
RT @NASDAQ: #LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LdjKEnFK5e
NASDAQ.com
12 Sep 14 14:16:16
#LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LdjKEnFK5e
NASDAQ OMX
12 Sep 14 14:16:10
#LeadershipLessons from Doug Sanders, President and CEO of Sprouts Farmers Market $SFM @sproutsfm http://t.co/LsbsQ8SpBc
BNK Invest
12 Sep 14 14:10:28
Sprouts Farmers Market Larger Than S&P 500 Component Allegheny Technologies $SFM $ATI #stocks http://t.co/UUeXNC9ZLp
Luis Gutierrez
12 Sep 14 12:41:39
$KR Kroger will become a multi-year story of going from traditional grocer to a Natural and Organic Grocer. Eating $WFM $SFM $TFM for lunch
Colin Macleod
11 Sep 14 18:56:14
4 Piercing Line Patterns I’m liking for longs & calls http://t.co/44qnXq7yNw $CMC $MFA $SFM $BEN
Zacks.com
11 Sep 14 13:58:12
Would you invest in organic food stocks? $BNNY $SFM $WMT $HAIN $WWAV $BDBD http://t.co/aBZUJLwdC7
Blazing Penny Plays
10 Sep 14 22:21:07
AZFL CURRENT MARKET VALUE $.0991 AZFL owns Land-Fazenda Jatuarana valued at $46,983,989 Based on cu $AZFL $SFM http://t.co/3otj9tvPQz
Blazing Penny Plays
10 Sep 14 22:17:46
AZFL CURRENT MARKET VALUE $.0991 AZFL owns Land-Fazenda Jatuarana valued at $46,983,989 Based on cu $AZFL $SFM http://t.co/UCiJfhPlfR
ivtrades
10 Sep 14 15:06:13
$GPRO $TWTR $SFM $KMI http://t.co/vbdFamaP0C
Charlie Baker
10 Sep 14 13:19:59
Sprouts Farmers Market Grand Opening - Arlington, TX - Live StockJocknRoll segment tonight from the store $SFM http://t.co/5ZXTF0je4r
US ECM Briefing
10 Sep 14 12:25:57
RT @_KarateBoy_: $SFM continues to struggle to find a bid post Apollo secondary. JOBS Act playbook repeating. Why pay moar? CC: @Barbarian…
KarateBoy
10 Sep 14 12:25:13
$SFM continues to struggle to find a bid post Apollo secondary. JOBS Act playbook repeating. Why pay moar? CC: @BarbarianCap
Analyst Ratings
9 Sep 14 07:45:00
Get the latest ratings for $WLKP $ATHL $FIVN $SFM $COLE in your inbox with ARN Daily http://t.co/nSJuDsYidj
4-traders.com
8 Sep 14 04:50:03
Whole Foods Expands Delivery Options http://t.co/jlIbfbJOC4 $SFM $WFM $WMT $KR
				
				
By  +Follow July 31, 2013 12:02PM
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