Sprouts Farmers Markets (SFM) is scheduled to report 4Q15 earnings before the market opens tomorrow. The company reported last quarter's earnings at 8 AM ET (and a conference call is scheduled at 10 AM ET)

• The Street expects Q4 adj EPS of $0.16 on revs up 24% to $911 mln
  • Implied guidance for Q4: adj EPS of $0.15-0.16 on revs of $869-928 mln
• Co beat and raised last earnings. The stock ended the day up ~16% at $23.01. The stock ran an additional 21%, before topping on January 5. On January 6, the co fell 4% on almost 5x daily volume on no news. The co preceded to sell off w/ the rest of the market before finding strong support at $21.25. The stock has recovered some of 2016's losses and is currently trading at the $25.00 level.

Guidance to Look For:

• The Street expects 1Q16 adj EPS of $0.30 on revs up 17% to $1 bln
• The Street expects FY 16 adj EPS of $0.95 on revs up 15% to $4.1 bln

Last Q's Guidance for FY 15

• FY 15 revs guidance remained unchanged at $3.53-3.59 bln. 
• Sees FY15 adj EPS of $0.83-0.84 vs Then Capital IQ Consensus of $0.81
• Increased Comps guidance for growth of 5-5.5% (from 4-5% prior guidance)
• Increased guidance for Adj EBITDA growth to 11-13% (from 10-12% prior guidance)

Mid-Term Financial Targets

• ~15%+ net sales
• Mid-single digits comps growth
• 14% unit growth
• 12-16% adj EBITDA growth
• Adj EPS growth of 14-18%

Other Guidance from Last Q

• 2016 real estate Pipeline is on target to help co achieve 14% annual unit growth 
• Expect new store productivity in 75-80% range going forward
• Ebitda margin of ~8.3% or 8.2% on 52 week basis

Analyst Commentary:

• On February 12, Stifel initiated coverage w/ a BUY- PT of $27. Stifel stated, "Peer comparison (adjusted for gross profit growth rates) suggests SFM's growth should justify a valuation of 10.8x EV/EBITDA or 22.0x P/E on FY17 estimates. These valuations on our current estimates imply a SFM share price of $26-$27, supporting our $27 target price."
• On January 22, Wells Fargo initiated with a Outperform
• On January 19, Deutsche Bank reiterated Buy rating w/ a $27 PT. DB stated, "we view SFM as the "KR" of the natural/organic space except with growth, given their similar strategies: Invest in price to generate traffic-driven, sustainable MSD comps and, therefore, drive EPS growth through leverage of fixed costs."

Peers: KR, WFM, TFM, WWAV