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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
NASDAQ
29 Jan 15 14:15:26
$SFM - Statement of Changes in Beneficial Ownership (4) http://t.co/EkTfDKPwrM
Insider Filings
29 Jan 15 14:15:10
$SFM: Frumkin Theodore Edward II sold a net $299,745 in Sprouts Farmers Market, Inc.. http://t.co/IiXaFQ0jRX
Westmark Associates
29 Jan 15 08:23:26
RT @TradersExpo: $DEI $SFM Two of best relative performance industry groups http://t.co/ZgRERYIKD9 http://t.co/3Igz8jBaFs
School of Trade
29 Jan 15 07:59:32
RT @TradersExpo: $DEI $SFM Two of best relative performance industry groups http://t.co/ZgRERYIKD9 http://t.co/3Igz8jBaFs
MoneyShow Trading
29 Jan 15 07:35:31
$DEI $SFM Two of best relative performance industry groups http://t.co/iOwWZAc7W3 http://t.co/rFrr9xZhtA
Lauren Holmes
29 Jan 15 07:35:24
Some top current names: $OXY $FB $GLW $TWTR $NGVC $SFM $IWM $QQQ short $CCE $GM $WFM $SPX Read our analysis here: http://t.co/VrsGMCgPOC
MoneyShow
29 Jan 15 07:35:13
$DEI $SFM Two of best relative performance industry groups http://t.co/EJwGxR3si0 http://t.co/mZiQncBN66
Traders Expo
29 Jan 15 07:34:55
$DEI $SFM Two of best relative performance industry groups http://t.co/ZgRERYIKD9 http://t.co/3Igz8jBaFs
TomAspray
29 Jan 15 07:34:30
$DEI $SFM Two of best relative performance industry groups http://t.co/UpKOd1Q3OH http://t.co/uEjrOWzeMI
Investors Hangout
29 Jan 15 07:21:37
Stocks Trending Now: http://t.co/oFJbweffVo $GOLCF $PFSCF $SAQ $DSU $BKCC $NGEY $STBMF $SFM $DEWM $RHDGF $GRMN $FXTGY ~
Breaking News
28 Jan 15 13:08:14
$SFM Sprouts Farmers Market Sets Date for Fourth Quarter and Full Year 2014 Earnings Release and Conference C... http://t.co/DgeBpT5I2R
NASDAQ
28 Jan 15 13:07:10
$SFM - Sprouts Farmers Market Sets Date for Fourth Quarter and Full Year 2014 Earnings Release and Conference http://t.co/MpYLAZyXNE
MoneyShow Trading
28 Jan 15 11:43:02
$AAPL $SPY $DEI $SFM $QQQ Market Leading Industry Groups http://t.co/LZK992hAxT
Traders Expo
28 Jan 15 11:42:06
$AAPL $SPY $DEI $SFM $QQQ Market Leading Industry Groups http://t.co/eWLbJSLb2M
TomAspray
28 Jan 15 11:41:37
$AAPL $SPY $DEI $SFM $QQQ Market Leading Industry Groups http://t.co/r547nWea8C
MoneyShow
28 Jan 15 11:40:11
$AAPL $SPY $DEI $SFM $QQQ Market Leading Industry Groups http://t.co/w2VjQOciPc
Boris Brdar
28 Jan 15 11:02:38
$sfm I wonder what downside risk after this 6 days of "new ratings" lifted stock 10%
James DiPlata
28 Jan 15 10:04:53
RT @JormaStarratt: All time high son! Holdings from largest to smallest: $aapl $baba $sfm $goog $f $twtr
World News Report
28 Jan 15 09:34:07
RT @HarryWalkman: $SFM Sprouts Farmers Market, Inc. (Nasdaq: SFM) to Ring The Nasdaq Stock Market ... http://t.co/IksZIUCrC1
Harry Walkman
28 Jan 15 09:32:59
$SFM Sprouts Farmers Market, Inc. (Nasdaq: SFM) to Ring The Nasdaq Stock Market ... http://t.co/IksZIUCrC1
Rod Surley
28 Jan 15 09:31:36
All time high son! Holdings from largest to smallest: $aapl $baba $sfm $goog $f $twtr
Mike Turner
28 Jan 15 07:17:33
Top 5 Consumer Staples Stocks http://t.co/7hucXstM4g #stocks #marketnews $CPB $LNCE $MNST $SFM $KR #turnertrends
ProTradersNews
28 Jan 15 04:31:05
$SFM: Laggard Stocks-Sprouts Farmers Market (SFM), AGCO (AGCO ...: http://t.co/vDaKu1Z2m9
KarateBoy, CFA
27 Jan 15 07:29:41
@HedgeyeHWP $SFM?
WKRB News
27 Jan 15 06:09:35
Insider Selling: Sprouts Farmers Market SVP Sells $59,864.52 in Stock $SFM http://t.co/DQFoqAUh68
StockNewsWires
27 Jan 15 05:21:06
$SFM: Sprouts Farmers Market Director Sells $437500.00 in Stock (SFM): http://t.co/0zL9JQJcKr
ProVesting
27 Jan 15 04:46:02
$SFM: Insider Selling: Sprouts Farmers Market CEO Sells $1772500.00 in ...: http://t.co/csmo3I3Upk
WKRB News
27 Jan 15 04:44:46
Insider Selling: Sprouts Farmers Market CEO Sells $1,772,500.00 in Stock $SFM http://t.co/gOX0QVNlrm
StockNewsWires
27 Jan 15 02:31:03
$SFM: Sprouts Farmers Market Inc Insider Trading Update: http://t.co/eWTQXuyrQf
Mr. Breakout
26 Jan 15 19:48:15
Mr. Breakout's Technical Favorites ►►► http://t.co/QmNA5og4Mm including $MANH $RAD $PCYC $SFM etc...
Sean
26 Jan 15 10:13:18
@BrattleStCap I hope this continues for $SFM, it could be a good short eventually. Reminds me of $TFM short a couple of yrs ago
Boris Brdar
26 Jan 15 09:26:45
$sfm bull concept: Sprouts is adding nearly $1 billion a year in sales almost as much as WFM, yet valuation is about 1/4 of the fat cat
Analyst Ratings
26 Jan 15 09:19:00
Want automatic email alerts for $ATHL $FIVN $SFM $COLE $HDS? Subscribe to ARN Daily http://t.co/nSJuDtP5Bv
Samuel Brown
26 Jan 15 09:00:58
$SFM Cowen and Company Begins Coverage on Sprouts Farmers Market (SFM) http://t.co/OafrqXsv0j
Brattle St. Capital
26 Jan 15 08:37:15
$SFM prettiest chart in the game http://t.co/mBpIhHVeTI
WKRB News
26 Jan 15 07:11:38
Cowen and Company Begins Coverage on Sprouts Farmers Market $SFM http://t.co/6NhdI5YhEj
Lauren Holmes
26 Jan 15 06:48:50
$AKRX $CELG $LNKD $SFM 4 Screaming Growth Stocks to Buy Get our thoughts here http://t.co/huaLsHHvaD
ProVesting
26 Jan 15 06:46:06
$SFM: Sprouts Farmers Market Earns Neutral Rating from Analysts at ...: http://t.co/25R3jaQfwJ
The Legacy News
26 Jan 15 05:57:27
Insider Selling: Theodore Edward Frumkin II Sells 1,668 Shares of Sprouts Farmers Market Stock $SFM http://t.co/iUqlrdJ0G8
Ticker Report
26 Jan 15 05:26:40
Joe Fortunato Sells 12,500 Shares of Sprouts Farmers Market Stock $SFM http://t.co/KvZMQqVVzy
12Stocks.com
26 Jan 15 03:03:45
Weekly MidCap #Stocks Trend $CREE $CYN $ALK $ATK $RMD $SFM $FEYE $AMCX $MXIM $CCI $IDXX $SJM $HXL $WSM $HNT @ http://t.co/gYYX3fEVde
Penny Stock Secret
26 Jan 15 01:15:52
This Guy Turned $100 into over $10,000 In Just 30 Days! http://t.co/vezCDY95do .. $SFM $EBAY $NLST
ProTradersNews
26 Jan 15 01:11:05
$SFM: First Call Rating Update on Sprouts Farmers Market Inc: http://t.co/hF1bHeTkih
IH News Desk
25 Jan 15 22:46:26
$HERXF Ask Size Click Here: http://t.co/cXkznjr2Ig Also See: $SFM $CPSV $LION $IMAX ~
Investors Hangout
25 Jan 15 20:58:51
Stocks Trending Now: http://t.co/ge4HpDSfvK $LAZ $GJK $NSAV $JKHY $MXCHY $ENGGF $IFAN $DNBHF $HDIUF $SFM $SVMN $POAHF ~
Spirit Capital
25 Jan 15 13:24:59
Finally seeing some signs we may get a more settled market. I have a number of longs on at the moment including $INSY, $RH, $PKG, $TW, $SFM
Deric Cadora, CTA
24 Jan 15 12:39:57
My long-term equity trend model delivered BUY signals this week for $ACGL and $SFM
12Stocks.com
24 Jan 15 03:03:33
Weekly MidCap #Stocks Trend $CREE $CYN $ALK $ATK $RMD $SFM $FEYE $AMCX $MXIM $CCI $IDXX $SJM $HXL $WSM $HNT @ http://t.co/gYYX3fEVde
jim50
24 Jan 15 02:14:59
Stocks Trending Now: http://t.co/04PvocSgRU $SFM $MHYS $PHXXF $WNR $HAZH $VTTW $EENX $WBK $JSAIY $INVC $LLESY $JOUT ~
ProVesting
23 Jan 15 20:26:06
$SFM: Insider Selling: Sprouts Farmers Market CEO James Douglas ...: http://t.co/bNQO9tsejE
				
				
By  +Follow July 31, 2013 12:02PM
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