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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. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for SFM
Capital Market Labs
19 Apr 15 05:37:23
$WFM vs. $CASY vs. $SFM vs. $PUSH Compared Across 9 Critical Measures http://t.co/1nV7Y3eNmH http://t.co/RGzYR4OD4D
Capital Market Labs
19 Apr 15 02:03:23
$SFM EPS is Accelerating. Here's the Chart: http://t.co/RrhGheYsXN http://t.co/SZoNXz9uPG
Clark Joseph Kent
18 Apr 15 22:08:19
Top Growth Stocks of 2015 $BIIB $PSXP $IPGP $NFLX $CBM $AKRX $AVGO $SFM http://t.co/shRC2zSjMV
Capital Market Labs
18 Apr 15 20:45:32
$SFM Revenue is Growing. Here's the Chart: http://t.co/fjMpbSwkZI http://t.co/6iCNMZu7hD
dailystockplays.com
18 Apr 15 07:14:12
Stochastic Oversold http://t.co/t4OwJrIq7A $GNC $DLTR $GD $POM $ARMK $TIF $TCK $DPS $SFM $SNH $MTSN $FNRG $PTX $HTWR $MWV $WCN $ICON $WSO
Capital Market Labs
18 Apr 15 01:50:16
Largest Food and Staples Retailing Inventory Management 1: $CASY 2: $WFM 3: $SFM Chart: http://t.co/yC4bf4Jqy8 http://t.co/CGyaeqxdjT
Capital Market Labs
17 Apr 15 16:11:30
$SFM Revenue is Rising. Here's the Chart: http://t.co/fjMpbSwkZI http://t.co/khjfCmsgRT
Woll Street
17 Apr 15 14:24:57
$SFM potential double bottom setup early next week... https://t.co/Xxc0BVjo1f Watch this one and $WFM for long entries IMHO.
Donald J Olive
17 Apr 15 13:51:39
RT @Briefingcom: $SFM: Sprouts Farmers Market announces the completion of a new five year, $450 mln revolving credit facility http://t.co/w…
John W. Green JW
17 Apr 15 13:46:38
RT @Briefingcom: $SFM: Sprouts Farmers Market announces the completion of a new five year, $450 mln revolving credit facility http://t.co/w…
Briefing.com
17 Apr 15 13:36:17
$SFM: Sprouts Farmers Market announces the completion of a new five year, $450 mln revolving credit facility http://t.co/wdjNpwJyaE
ProTradersNews
17 Apr 15 13:14:04
$SFM: New SEC Filing for SFM: Form 8-K (No. 0001193125-15-135742): http://t.co/29fz4fPAlU
NASDAQ
17 Apr 15 13:11:16
$SFM - Current Report Filing (8-k) http://t.co/3IU7LG42CT
SEC Filings Reporter
17 Apr 15 13:10:38
NEW SEC Filing for $SFM filed a moment ago: http://t.co/xyZw2uebjK http://t.co/bl8cwB0Dve
Anton
17 Apr 15 11:56:11
RT @KymLang: lookie $KR $WFM $SFM $TFM - $KR especially interesting since it's been a monster.
Kym L
17 Apr 15 11:52:05
lookie $KR $WFM $SFM $TFM - $KR especially interesting since it's been a monster.
StockNewsWires
17 Apr 15 11:43:02
$SFM: Sprouts Farmers Market Completes New Credit Facility: http://t.co/5dClAfaldG
Breaking News
17 Apr 15 11:38:05
$SFM Sprouts Farmers Market Completes New Credit Facility http://t.co/XjKPnFbcNp
NASDAQ
17 Apr 15 11:37:03
$SFM - Sprouts Farmers Market Completes New Credit Facility http://t.co/9GSm0oRd2O
Alfred Ip
17 Apr 15 08:45:02
Commented on StockTwits: yep all of them $wfm $tfm $sfm all getting hit http://t.co/Tc8EVpZTBH
Capital Market Labs
17 Apr 15 03:08:33
$WFM vs. $SFM vs. $CASY vs. $SVU Compared Across 9 Critical Measures Chart: http://t.co/qx32Ba0kAh
Capital Market Labs
16 Apr 15 22:50:44
Largest Food and Staples Retailing Inventory Management 1. $CASY 2. $WFM 3. $SFM Full Chart: http://t.co/7Ixuc0Pvfz #CML
Capital Market Labs
16 Apr 15 18:33:42
$WFM vs. $SFM vs. $SVU vs. $SFS Compared Across 9 Critical Measures Chart: http://t.co/8FcafnvpNX #CML
Intrinio
16 Apr 15 12:41:01
Whole Foods Or Sprouts: Which Organic Retailer Should You Invest In? $WFM vs. $SFM >> http://t.co/CmhCU6L5uv
J.B.
16 Apr 15 09:07:04
$SFM starting to bounce, see if it holds here
Boris Brdar
16 Apr 15 08:53:12
$sfm priced at $33.36 with impeccable quaterly performance and a Morgan Stanley latest best idea blessing on 3/31/2015.
BreakingStocksNews
16 Apr 15 05:26:05
$WFM $SFM: Should Whole Foods Market Inc. Be Worried About The Kroger Co.?: http://t.co/tGkp9ApTrP
NASDAQ
16 Apr 15 05:21:08
$SFM - Should Whole Foods Market Inc. Be Worried About The Kroger Co.? http://t.co/e2iubRp3Va
TopFlight Trades
15 Apr 15 21:58:52
Technical plays posted: $UAL $ODFL $TSEM $JAZZ $WX $SFM http://t.co/EBisQh8Ui2
TopFlight Trades
15 Apr 15 21:58:26
http://t.co/tf7TUyw6Yu Neutral on Technical plays posted: $UAL $ODFL $TSEM $JAZZ $WX $SFM http://t.co/XNN6z8Ge0U
Jahi Faucette
15 Apr 15 21:21:16
RT @JorelLaraKalel: #IBD Top Fundamentals $LCI $SFM $VIPS $KW $WETF $RYL $REGN $CMCM $EIGI $OLED http://t.co/Nejrc67Vqt
Clark Joseph Kent
15 Apr 15 21:07:55
#IBD Top Fundamentals $LCI $SFM $VIPS $KW $WETF $RYL $REGN $CMCM $EIGI $OLED http://t.co/Nejrc67Vqt
Capital Market Labs
15 Apr 15 21:00:22
$WFM vs. $SFM vs. $SVU vs. $PUSH Compared Across 9 Critical Measures Chart: http://t.co/oPEmwqMVKh #CML
Clark Joseph Kent
15 Apr 15 20:03:23
After-Hours Gainers as of 5:15 p.m.: $NFLX +11.5% $SNTA +6.6% $TCPI +3.6% $SFM +2.8% $GSAT +2.8%
kyookine
15 Apr 15 19:42:16
After Hours Gainers / Losers http://t.co/GTQQFEB2Uk $NFLX $SNTA $TCPI $SFM
rahagar
15 Apr 15 18:40:10
$KR Grocery stores were robbed today, coordinated selling, it appears. $WFM $TFM $SFM $SVU $NGVC $FWM $SFS and more http://t.co/RdNfGLYhWJ
Capital Market Labs
15 Apr 15 16:36:58
$WFM vs. $SFM vs. $PUSH vs. $CASY Compared Across 9 Critical Measures Chart: http://t.co/yZGY1WUrFR #CML
gordon gekko is god
15 Apr 15 15:29:52
Double-digit sales growth for organic food in U.S. http://t.co/zSoRt8HH5J $THS, $SFM, $FWM, $TFM, $WFM, $HAIN, $WWAV, $GPDB, $LWAY, $UNFI
Jen Liu
15 Apr 15 14:56:54
RT @StocksMove_SA: After Hours Gainers / Losers http://t.co/zvKSCfIt5T $NFLX $SNTA $TCPI $SFM
Kym L
15 Apr 15 14:52:24
$TFM $SFM $WFM not looking so good - not sure what's going on there
gordon gekko is god
15 Apr 15 14:41:35
After Hours Gainers / Losers http://t.co/E0OSVnLeEv $NFLX, $SNTA, $TCPI, $SFM, $GSAT, $PTX, $PKD, $BCEI, $CJES, $CPLP
Quantpost Service
15 Apr 15 14:35:12
$NFLX News: "After Hours Gainers / Losers $NFLX $SNTA $TCPI $SFM" http://t.co/AtqvvjSxJj Analyze: https://t.co/7tXZWrVlcI
Quantpost $NFLX
15 Apr 15 14:35:10
$NFLX News: "After Hours Gainers / Losers $NFLX $SNTA $TCPI $SFM" http://t.co/V8x7ZrhVFU Analyze: https://t.co/yL3wsTDnEQ
Stocks On The Move
15 Apr 15 14:35:10
After Hours Gainers / Losers http://t.co/zvKSCfIt5T $NFLX $SNTA $TCPI $SFM
SA Breaking News
15 Apr 15 14:35:09
After Hours Gainers / Losers http://t.co/KnGVwuoX6N $NFLX $SNTA $TCPI $SFM
Cabeza Howe
15 Apr 15 13:05:59
Initiated a modest position in $SFM right before market close. Can't resist my contrarian nature. Also added some $BAC today.
AlsoThere
15 Apr 15 12:47:49
RT @MatthewMcCall: Double-digit sales growth for organic food in U.S. http://t.co/saiRHIk9R1 $THS $SFM $FWM $TFM
Clark Joseph Kent
15 Apr 15 10:12:43
Double-digit sales growth for organic food in U.S. $THS $SFM $FWM $TFM $WFM $HAIN $WWAV $OTCPK:GPDB $LWAY $UNFI $GIS http://t.co/pEdUPZiSuW
Matt McCall
15 Apr 15 08:56:42
Double-digit sales growth for organic food in U.S. http://t.co/saiRHIk9R1 $THS $SFM $FWM $TFM
Capital Market Labs
15 Apr 15 08:50:47
$WFM vs. $SFM vs. $SVU Compared Across 9 Critical Measures Chart: http://t.co/Ur0O9iPuUa #CML
				
				
By  +Follow July 31, 2013 12:02PM
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