Why Sprouts Farmers Market Stock Was Soaring Today

Shares of Sprouts Farmers Market (NASDAQ: SFM) were surging today after the supermarket chain posted strong second-quarter results last night. As a result, the stock was up 16.5% as of 10:09 a.m. ET.

Sprouts keeps looking fresher

Sprouts' business prides itself on fresh produce and a focus on wellness, and the company continues to impress Wall Street. The grocer beat estimates on both the top and bottom lines.

Image source: Getty Images.

Comparable sales in the quarter rose 6.7%, driving revenue up 12% to $1.89 billion, which topped the consensus of $1.84 billion. Gross margin improved from 37% to 37.9%, which helped drive earnings per share up from $0.65 to $0.94, easily topping expectations of $0.78.

CEO Jack Sinclair said: "Customers are responding to our healthy product assortment and our unique in-store experience. We are excited about the opportunities ahead."

What's next for Sprouts

Sprouts' differentiated approach is clearly resonating with customers as the company is gaining market share, opening new stores, and growing comparable sales. The stock has also soared recently, up nearly 500% in the last five years, an impressive performance for any consumer staples stock, let alone a supermarket chain.

Looking ahead, the company sees comparable-sales growth of 3.5%-4.5% in the quarter and 4%-5% for the full year, up from a previous range of 2.5%-3.5%. As for earnings per share (EPS), it called for $0.71-$0.75 in the third quarter and $3.29-$3.37 for the full year, better than its earlier forecast of $3.05-$3.13. Both those figures were better than estimates, which called for $0.69 in EPS in the first quarter and $3.15 for the full year.

While Sprouts' valuation is now the highest it's been in nearly a decade, the stock could move even higher if the company continues to beat estimates and raise guidance.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Sprouts Farmers Market. The Motley Fool has a disclosure policy .