Grocery store chain Sprouts Farmers Market (NASDAQ: SFM) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 4.7% year on year to $2.33 billion. Its GAAP profit of $1.37 per share was 2% above analysts’ consensus estimates.
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Sprouts (SFM) Q2 CY2026 Highlights:
- Revenue: $2.33 billion vs analyst estimates of $2.32 billion (4.7% year-on-year growth, in line)
- EPS (GAAP): $1.37 vs analyst estimates of $1.34 (2% beat)
- Adjusted EBITDA: $219.8 million vs analyst estimates of $213 million (9.5% margin, 3.2% beat)
- EPS (GAAP) guidance for the full year is $5.36 at the midpoint, missing analyst estimates by 3.4%
- Operating Margin: 7.5%, in line with the same quarter last year
- Free Cash Flow Margin: 1.9%, similar to the same quarter last year
- Locations: 490 at quarter end, up from 455 in the same quarter last year
- Same-Store Sales fell 1% year on year (10.2% in the same quarter last year)
- Market Capitalization: $7.31 billion
“Our second-quarter results were in line with our expectations," said Jack Sinclair, chief executive officer of Sprouts Farmers Market.
Company Overview
Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ: SFM) is a grocery store chain emphasizing natural and organic products.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $9.00 billion in revenue over the past 12 months, Sprouts is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.
As you can see below, Sprouts’s 10.9% annualized revenue growth over the last three years was decent as it opened new stores and increased sales at existing, established locations.
This quarter, Sprouts grew its revenue by 4.7% year on year, and its $2.33 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 10.3% over the next 12 months, similar to its three-year rate. This projection is eye-popping and suggests the market sees success for its products.
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Store Performance
Number of Stores
Sprouts sported 490 locations in the latest quarter. Over the last two years, it has opened new stores at a rapid clip by averaging 8% annual growth, among the fastest in the consumer retail sector. This gives it a chance to become a large, scaled business over time.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Same-Store Sales
A company’s store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Sprouts has been one of the most successful retailers over the last two years thanks to skyrocketing demand within its existing locations. On average, the company has posted exceptional year-on-year same-store sales growth of 5.8%. This performance suggests its rollout of new stores is beneficial for shareholders. We like this backdrop because it gives Sprouts multiple ways to win: revenue growth can come from new stores, e-commerce, or increased foot traffic and higher sales per customer at existing locations.
In the latest quarter, Sprouts’s same-store sales fell by 1% year on year. This decline was a reversal from its historical levels. A one-quarter hiccup shouldn’t deter you from investing in a business, and we’ll be monitoring the company to see how things progress.
Key Takeaways from Sprouts’s Q2 Results
Revenue was in line. On the positive side, it was encouraging to see Sprouts beat analysts’ EBITDA expectations this quarter. We were also happy its gross margin narrowly outperformed Wall Street’s estimates. On the other hand, its EPS guidance for next quarter missed and its full-year EPS guidance fell short of Wall Street’s estimates. Overall, this was a mixed quarter. The stock traded up 5.1% to $83.05 immediately following the results.
Big picture, is Sprouts a buy here and now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
