Taking everything into account, SFM scores 8 out of 10 in our fundamental rating. SFM was compared to 38 industry peers in the Consumer Staples Distribution & Retail industry. SFM gets an excellent profitability rating and is at the same time showing great financial health properties. An interesting combination arises when we look at growth and value: SFM is growing strongly while it also seems undervalued. This makes SFM very considerable for value and growth and quality investing!

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year SFM was profitable.
SFM had a positive operating cash flow in the past year.
Each year in the past 5 years SFM has been profitable.
SFM had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

SFM has a better Return On Assets (12.79%) than 89.47% of its industry peers.
With an excellent Return On Equity value of 35.79%, SFM belongs to the best of the industry, outperforming 92.11% of the companies in the same industry.
The Return On Invested Capital of SFM (15.78%) is better than 92.11% of its industry peers.
SFM had an Average Return On Invested Capital over the past 3 years of 11.53%. This is significantly below the industry average of 28.30%.
The 3 year average ROIC (11.53%) for SFM is below the current ROIC(15.78%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	12.79%
ROE	35.79%
ROIC	15.78%

ROA(3y)8.91%

ROA(5y)9.07%

ROE(3y)25.43%

ROE(5y)26.87%

ROIC(3y)11.53%

ROIC(5y)11.58%

1.3 Margins

The Profit Margin of SFM (5.93%) is better than 89.47% of its industry peers.
SFM's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 7.84%, SFM belongs to the top of the industry, outperforming 89.47% of the companies in the same industry.
SFM's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 38.83%, SFM belongs to the top of the industry, outperforming 84.21% of the companies in the same industry.
SFM's Gross Margin has improved in the last couple of years.

		Industry Rank	Sector Rank
OM	7.84%
PM (TTM)	5.93%
GM	38.83%

OM growth 3Y6.47%

OM growth 5Y10.94%

PM growth 3Y7.19%

PM growth 5Y13.18%

GM growth 3Y1.71%

GM growth 5Y2.53%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so SFM is still creating some value.
SFM has less shares outstanding than it did 1 year ago.
SFM has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, SFM has an improved debt to assets ratio.

2.2 Solvency

An Altman-Z score of 4.54 indicates that SFM is not in any danger for bankruptcy at the moment.
SFM has a better Altman-Z score (4.54) than 63.16% of its industry peers.
The Debt to FCF ratio of SFM is 0.12, which is an excellent value as it means it would take SFM, only 0.12 years of fcf income to pay off all of its debts.
SFM has a better Debt to FCF ratio (0.12) than 97.37% of its industry peers.
A Debt/Equity ratio of 0.04 indicates that SFM is not too dependend on debt financing.
SFM has a Debt to Equity ratio of 0.04. This is amongst the best in the industry. SFM outperforms 86.84% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.04
Debt/FCF	0.12
Altman-Z	4.54

ROIC/WACC1.79

WACC8.84%

2.3 Liquidity

SFM has a Current Ratio of 1.05. This is a normal value and indicates that SFM is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.05, SFM is doing worse than 60.53% of the companies in the same industry.
A Quick Ratio of 0.53 indicates that SFM may have some problems paying its short term obligations.
With a Quick ratio value of 0.53, SFM perfoms like the industry average, outperforming 47.37% of the companies in the same industry.
The current and quick ratio evaluation for SFM is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

		Industry Rank	Sector Rank
Current Ratio	1.05
Quick Ratio	0.53

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

SFM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 49.42%, which is quite impressive.
Measured over the past years, SFM shows a very strong growth in Earnings Per Share. The EPS has been growing by 24.64% on average per year.
Looking at the last year, SFM shows a quite strong growth in Revenue. The Revenue has grown by 16.60% in the last year.
The Revenue has been growing slightly by 6.50% on average over the past years.

EPS 1Y (TTM)49.42%

EPS 3Y21.43%

EPS 5Y24.64%

EPS Q2Q%34.07%

Revenue 1Y (TTM)16.6%

Revenue growth 3Y8.16%

Revenue growth 5Y6.5%

Sales Q2Q%13.09%

3.2 Future

The Earnings Per Share is expected to grow by 16.28% on average over the next years. This is quite good.
The Revenue is expected to grow by 10.63% on average over the next years. This is quite good.

EPS Next Y41.5%

EPS Next 2Y24.47%

EPS Next 3Y20.51%

EPS Next 5Y16.28%

Revenue Next Year14.66%

Revenue Next 2Y12.38%

Revenue Next 3Y11.49%

Revenue Next 5Y10.63%

3.3 Evolution

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 13.57, which indicates a correct valuation of SFM.
Compared to the rest of the industry, the Price/Earnings ratio of SFM indicates a somewhat cheap valuation: SFM is cheaper than 78.95% of the companies listed in the same industry.
SFM is valuated cheaply when we compare the Price/Earnings ratio to 28.60, which is the current average of the S&P500 Index.
SFM is valuated correctly with a Price/Forward Earnings ratio of 12.04.
Compared to the rest of the industry, the Price/Forward Earnings ratio of SFM indicates a rather cheap valuation: SFM is cheaper than 81.58% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of SFM to the average of the S&P500 Index (25.83), we can say SFM is valued rather cheaply.

		Industry Rank	Sector Rank
PE	13.57
Fwd PE	12.04

4.2 Price Multiples

SFM's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. SFM is cheaper than 71.05% of the companies in the same industry.
73.68% of the companies in the same industry are more expensive than SFM, based on the Price/Free Cash Flow ratio.

		Industry Rank	Sector Rank
P/FCF	14.93
EV/EBITDA	7.99

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
SFM has an outstanding profitability rating, which may justify a higher PE ratio.
SFM's earnings are expected to grow with 20.51% in the coming years. This may justify a more expensive valuation.