RF Capital Management, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. In the first quarter of 2022, RF Capital returned +3.06% net of all fees. Additionally, RF Capital generated a +54.3% and -0.56% return net of all fees in FY 2021 and H2 2021, respectively. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, RF Capital Management mentioned Sprouts Farmers Market, Inc. (NASDAQ:SFM) and explained its insights for the company. Founded in 2002, Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a Phoenix, Arizona-based supermarket company with a $2.7 billion market capitalization. Sprouts Farmers Market, Inc. (NASDAQ:SFM) delivered a -15.23% return since the beginning of the year, while its 12-month returns are down by -2.33%. The stock closed at $25.16 per share on May 25, 2022.
Here is what RF Capital Management has to say about Sprouts Farmers Market, Inc. (NASDAQ:SFM) in its Q1 2022 investor letter:
“Sprouts continues to make progress despite inflation and supply chain constraints. For the year, SFM opened 12 new stores and 2 new distribution centers. Also, SFM launched over 5,700 new products and 4 new format stores. More importantly, Q4 traffic was positive. On the other hand, sales, EPS and FCF were down compared to FY 2020. However, using 201 figures may be more useful given how COVID-19 provided a huge tailwind for SFM. If we consider 2019 sales, EPS and FCF as normalized numbers, then Sprouts is still performing well given how net sales, adjusted EPS and cash flow increased 8%, 68% and 3%, respectively, versus 2019. Guidance for 2022 was also positive.
Management has provided the following:
– Sales growth of 4%-6%
– Comp store sales growth of 0%-2%
– 15 to 20 new stores
– Flat gross margin and SG&A increase of 4%-6%
– Adjusted EBITDA of $330-$345M
– 25% effective tax rate
– Adjusted EPS of $2.14-$2.24
– CapEx of $150-$170MAdditionally, SFM is on track to achieve its 10% store growth target. The real estate team currently has 80 approved sites and more than 50 signed leases. By 2023, SFM should be closer to the 10% growth target. Overall, we believe Sprouts remains a great long-term investment. SFM continues to be one of our largest positions at 14.10%. Despite COVID-19 no longer providing a tailwind, sales, EPS and FCF continue to grow and new stores are opened every year…” (Click here to see the full text)
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Our calculations show that Sprouts Farmers Market, Inc. (NASDAQ:SFM) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Sprouts Farmers Market, Inc. (NASDAQ:SFM) was in 24 hedge fund portfolios at the end of the first quarter of 2022, compared to 21 funds in the previous quarter. Sprouts Farmers Market, Inc. (NASDAQ:SFM) delivered a -12.27% return in the past 3 months.
In February 2022, we also shared another hedge fund’s views on Sprouts Farmers Market, Inc. (NASDAQ:SFM) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
