Sprouts Farmers Market faces class action lawsuit amid stock drop
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 27 2026
0mins
Should l Buy SFM?
Source: Globenewswire
Sprouts Farmers Market Inc's stock fell by 4.05%, hitting a 20-day low, following disappointing Q3 results and ongoing legal challenges.
The decline is attributed to a class action lawsuit initiated by investors who allege that the company misled them about its growth potential, particularly after reporting a 4.3% decrease in comparable store sales growth for Q3 FY2025. This legal action, coupled with projections for Q4 growth between 0%-2%, has raised significant concerns about the company's future performance, leading to a loss of investor confidence despite the broader market's positive movement.
The implications of this lawsuit could be severe for Sprouts Farmers Market, as it may expose the company to substantial liabilities and further erode trust among investors, especially in light of the current economic climate.
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Analyst Views on SFM
Wall Street analysts forecast SFM stock price to rise
13 Analyst Rating
7 Buy
6 Hold
0 Sell
Moderate Buy
Current: 67.560
Low
77.00
Averages
114.33
High
160.00
Current: 67.560
Low
77.00
Averages
114.33
High
160.00
About SFM
Sprouts Farmers Market, Inc. is a specialty natural and organic food retailer. The Company brings products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free. The Company categorizes the varieties of products it sells as perishable and non-perishable. Its perishable product categories include produce, meat and meat alternatives, seafood, deli, bakery, floral and dairy and dairy alternatives. Its produce products include fruits; vegetables; toppings, refrigerated dressings & dips; miscellaneous produce, and floral. Its non-perishable product categories include grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care. Its beer & wine products include red wine, white wine, rose & blush, champagne & sparkling, beer, non-alcoholic, and sweet wines. Its target customer is comprised of two specific groups: health enthusiasts and selective shoppers. It operates more than 440 stores in 24 states nationwide.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Revenue Expectations: The anticipated revenue for Q4 is $2.15 billion, representing a 7.5% year-over-year increase, which suggests the company is maintaining stable sales growth in a competitive market environment.
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- Revenue Expectations: The anticipated revenue for Q4 is $2.15 billion, representing a 7.5% year-over-year increase, which suggests the company is maintaining stable sales growth in a competitive market environment.
- Historical Performance: Over the past two years, Sprouts Farmers Market has beaten EPS estimates 88% of the time and revenue estimates 88% of the time, demonstrating reliability in financial forecasting and market confidence.
- Estimate Revisions: In the last three months, EPS estimates have seen one upward revision and four downward revisions, while revenue estimates have experienced no upward revisions and two downward revisions, reflecting a cautious market outlook on the company's future performance.
See More
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- Nintendo's Growth Cycle: Since the launch of the Switch 2 in June 2025, Nintendo has sold 17 million units and expects to reach 19 million by the end of the fiscal year, driving nearly 100% year-over-year revenue growth, indicating strong market demand and future growth potential.
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- Valuation Appeal: With a P/E ratio of 13.3, Sprouts' stock, trading below $70, is seen as an attractive investment opportunity given its projected double-digit revenue growth over the next five years, making it suitable for long-term investors.
See More
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- Market Performance: As of February 13, 2026, Sprouts Farmers Market shares traded at $68.96, reflecting a 60.9% decline over the past year, significantly underperforming the S&P 500 by 73 percentage points, highlighting its weak market position.
- Investment History: Promethos originally purchased Sprouts shares at approximately $48 each in Q4 2023 and sold about half of its holdings after the stock price more than doubled, demonstrating sensitivity to market volatility.
- Future Outlook: Despite Promethos's exit, Sprouts Farmers Market plans to expand to 1,400 locations over the next decade, with 70% of its products being attribute-driven, indicating a strong competitive differentiation in the market.
See More
Investors Eye Opportunities in Undervalued Stocks
- Sprouts Farmers Market Undervalued: Sprouts Farmers Market stock has plummeted over 60% since its peak in 2024, now trading at less than 12 times the projected earnings of $5.74 per share, significantly below the analyst target of $108.73, indicating a market misunderstanding of its growth potential in the health food sector.
- Progressive Insurance Value: Progressive stock is currently priced at less than 13 times earnings, with a projected dividend yield of nearly 6.7%, and despite slowing revenue growth, the company continues to perform well in the insurance industry, highlighting its investment appeal.
- PayPal's Market Control: PayPal stock is valued at less than eight times expected earnings of $5.34 per share, and despite fierce competition in the digital payment space, it still commands about 40% of the market, demonstrating its strong position in the industry.
- Potential of New CEO: PayPal is set to welcome new CEO Enrique Lores, who is expected to bring fresh ideas and perspectives, potentially revitalizing the company and helping it maintain its competitive edge in a crowded market.
See More
