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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
Jay Apted
29 Aug 15 15:10:28
@jimcramer All natural & organic, just like the produce at $SFM.
Reporting Standards
29 Aug 15 14:21:55
$SFM Sprouts Farmers Market, Inc. filed a new #XBRL report to the #SEC. http://t.co/mr7UgApCpS
chartguy89
29 Aug 15 14:16:00
SFM -0.78% Stock Charts $SFM Sprouts Farmers Market Inc. (NASDAQ) Last Updated: 08/29/2015 16:16:05 SFM Stock http://t.co/vRMllM2vKR
Capital Market Labs
29 Aug 15 12:57:51
8 Food and Staples with Great Fundamentals but Death Cross $COST $WFM $SFM $SVU http://t.co/WnbEg3OFES http://t.co/y1cSoERNwC
WatchTheFunds
29 Aug 15 05:09:02
$SFM Institutional ownership up 8.94% Q/Q, with 11,053,600 net purchase http://t.co/1T42ZSuiEk http://t.co/Vm798lLuop
Analyst Actions
29 Aug 15 04:27:02
$SFM: Bullish analyst action by Deutsche Bank on Sprouts Farmers Market: http://t.co/fyd7v5JL40 http://t.co/zcDeoCi8ff
BreakingStocksNews
29 Aug 15 04:17:03
$SFM: Sprouts Farmers Market Raised to “Buy” at Deutsche Bank (SFM): http://t.co/rNPtRddwqN
Hisurfexp
28 Aug 15 19:46:32
$STEM $0.40 390,532.00 $SID $0.93 1,014,002.00 $SFY $0.53 1,826,549.00 $SFM $20.44 1,606,492.00 $SEMG $54.59 603,936.00
Capital Market Labs
28 Aug 15 16:09:32
$SFM High Fundamental Rating -> http://t.co/4dUkRVXC5O http://t.co/KAMvsPLlMR
Jeffrey Blake
28 Aug 15 15:43:24
$SFM Why Sprouts Farmers Market Inc. Stock Plunged 11.6% Friday http://t.co/lLpxtgQaqH
Capital Market Labs
28 Aug 15 11:27:18
Interactive Chart -> http://t.co/loC2tQHgFM $SFM Earnings are Rising. http://t.co/CXkZv9LIN9
WKRB News
28 Aug 15 10:27:28
Sprouts Farmers Market Now Covered by Jefferies Group $SFM http://t.co/nekvori0dU
DailyStockPicks
27 Aug 15 23:41:02
$ANFI huge bounce play as short attack put in doubt. 100%-200% upside potential $AUY $SFM $BERY investors read http://t.co/L1jwUV6Bag
TimeForGrowth
27 Aug 15 21:30:03
$SFM: Wall Street analysts bullish on SFM's earnings growth: http://t.co/AQndrkbLj0 http://t.co/1PJLNTfa83
Capital Market Labs
27 Aug 15 21:29:38
Interactive Chart -> http://t.co/0een9s52Pp $SFM Revenue is Expanding. http://t.co/xXSZ0EwKzC
InvestWithConf
27 Aug 15 16:09:03
$SFM is rated BUY, 47.5% upside by Wall Street analysts based on average ratings/targets http://t.co/vsT7LDMgLI http://t.co/SsTyOUCXrJ
Analyst Actions
27 Aug 15 11:56:02
$SFM: Analyst action by Jefferies on Sprouts Farmers Market: http://t.co/a5FgvPOB5q http://t.co/4U3HcpotMG
Sleek Money
27 Aug 15 11:22:17
Sprouts Farmers Market Stock Rating Upgraded by Deutsche Bank $SFM http://t.co/ETP80Z5U53
WatchTheFunds
27 Aug 15 10:41:03
$SFM Institutional ownership up 8.94% Q/Q, with 11,053,600 net purchase http://t.co/1T42ZSuiEk http://t.co/WCzKEMPDfl
Chucks & Shades
27 Aug 15 10:08:27
Interested in $SFM. Looking for the bottom. #trading #stocks #money
wsnewspublishers
27 Aug 15 07:59:44
Active Movers – http://t.co/Qqan36jvd9 $ROVI $SNH $SFM $SGY
Breaking News Now
27 Aug 15 06:54:04
$SNH $SFM: Active Movers – Rovi Corporation (NASDAQ:ROVI), Senior Housing …: http://t.co/1sPqsk0jjf
Breaking News
27 Aug 15 06:44:02
$ROVI $SNH $SFM: Active Movers – Rovi Corporation (NASDAQ:ROVI), Senior Housing …: http://t.co/sbUHKpWzrm
Long & Short Ideas
27 Aug 15 04:35:44
The Fresh Market - Chickens Come Home To Roost http://t.co/1umavH5pp6 $SFM $WFM $TFM
Quantpost Service
27 Aug 15 04:35:44
$WFM News: "The Fresh Market - Chickens Come Home To Roost $SFM $WFM $TFM" http://t.co/9ezvDxYKbQ Analyze: https://t.co/HEa05mEKW9
Seeking Alpha
27 Aug 15 04:35:44
The Fresh Market - Chickens Come Home To Roost http://t.co/1aKhDZ2Ws8 $SFM $WFM $TFM
Sleek Money
27 Aug 15 03:49:54
Sprouts Farmers Market Now Covered by Analysts at Jefferies Group $SFM http://t.co/mioB3nlP80
ProVesting
27 Aug 15 03:33:03
$SFM $SYF $CBG: Analysts Launch Coverage On 3 Stocks: Sprouts Farmers Market Inc …: http://t.co/Iz2rlWnNhw
Capital Market Labs
27 Aug 15 02:07:02
6 Food and Staples with Great Fundamentals but Bearish Momentum $COST $WFM $SFM $WMK http://t.co/wBqTOQWCAU http://t.co/LcmpCbQmYE
Analyst Actions
26 Aug 15 19:23:01
$SFM: Analyst action by Jefferies on Sprouts Farmers Market: http://t.co/a5FgvPOB5q http://t.co/kTK7hIzzCG
Briefing.com
26 Aug 15 13:33:04
See the latest #Equity #ratings changes direct from #brokerage firms http://t.co/OCPRWKgfok $SPR $LXK $IRG $BA $SFM $GLBL $ANF $DSW $TOL
WallStreetConsensus
26 Aug 15 13:21:04
Initiations 8/26: $GLBL, $MYL, $ZBRA, $NGVC, $BA, $AMT, $SFM, $CCI, $TSL http://t.co/PuDg2vDApT
GNWLive
26 Aug 15 13:02:39
Sprouts Farmers Market to Present at the Goldman Sachs 22nd Annual Global Retailing Conference $SFM http://t.co/Bf9V0r0Gqa
StockNewsWires
26 Aug 15 10:09:04
$SFM: Sprouts Farmers Market, Inc. (NASDAQ:SFM) Analyst Rating in Focus: http://t.co/to5c2ymgnh
Breaking News
26 Aug 15 09:01:03
$SFM $NGVC: An ‘Organic’ Pair Trade: Why Jefferies Prefers Natural Grocers To …: http://t.co/qL8a9UFxMd
BreakingStocksNews
26 Aug 15 07:35:02
$SFM: Benzinga’s Top Initiations: http://t.co/uQoi8G2CQm
WatchTheFunds
26 Aug 15 07:07:04
$SFM Institutional ownership up 8.94% Q/Q, with 11,053,600 net purchase http://t.co/1T42ZSuiEk http://t.co/6Olr4FeHLa
The Fly
26 Aug 15 07:01:03
On The Fly: Analyst Initiation Summary $CBG $CALD $JLL $NGVC $NEP $SFM $SYF $GLBL $ZBRA $TSL: Full Story http://t.co/00t38J5ern
WKRB News
26 Aug 15 05:06:30
Sprouts Farmers Market Upgraded to “Buy” at Deutsche Bank $SFM http://t.co/cuU7PPSVxo
FirstToMarkets
26 Aug 15 04:45:06
Sprouts Farmers Market, Inc. Initiated Coverage by Jefferies & Co (Ranked 17th) to Hold $SFM #SFM http://t.co/f76Y2ZeVEC
US Consumer News
26 Aug 15 04:34:04
Sprouts Farmers Market initiated by Jefferies Group at hold. http://t.co/HPO10ip8w1 $SFM #SFM
MarketBeatCom
26 Aug 15 04:31:37
Sprouts Farmers Market initiated by Jefferies Group at hold. http://t.co/TQwkMmvrXM $SFM #SFM
Seeking Alpha Alerts
25 Aug 15 23:30:04
@jakewuebben1 $sfm Sprouts: Living The Dream (Of High Returns) Again http://t.co/YpmMiMDLbx
Long & Short Ideas
25 Aug 15 23:29:13
Sprouts: Living The Dream (Of High Returns) Again http://t.co/Bt12sHImOq $SFM
Seeking Alpha
25 Aug 15 23:29:12
Sprouts: Living The Dream (Of High Returns) Again http://t.co/9RsBySVoLW $SFM
StockNewsWires
25 Aug 15 22:59:03
$SFM: Sprouts Farmers Market, Inc. Short Interest Update: http://t.co/wBgBdJ8Qr5
ProVesting
25 Aug 15 17:55:04
$SFM: Analyst at Deutsche Bank sets Sprouts Farmers Market Target at …: http://t.co/lRkFAZQ9e6
ProTradersNews
25 Aug 15 12:01:05
$SFM: Sprouts Farmers Market, Inc. (NASDAQ:SFM) Given $20-$38 PT …: http://t.co/GhZtKAkF7h
WallStreetConsensus
25 Aug 15 11:58:42
Upgrades 8/25: $ROVI, $AXDX, $PAY, $TER, $STON, $RF, $WDAY, $OZRK, $UMPQ, $COR, $BAC, $SFBS, $SFM, $GRC, $XL, $HAFC http://t.co/X2QT8idJzB
Javier Hasse
25 Aug 15 11:55:36
8 Reasons Sprouts Farmers Market Is A Screaming Buy $KR $SFM http://t.co/FD5aCKZ8Vz via @benzinga
				
				
By  +Follow July 31, 2013 12:02PM
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