Critical Analysis: Sprouts Farmers Market (NASDAQ:SFM) and Greggs (OTCMKTS:GGGSF)

Greggs (OTCMKTS:GGGSF) and Sprouts Farmers Market (NASDAQ:SFM) are both consumer cyclical companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, institutional ownership, profitability and analyst recommendations.

Earnings & Valuation

This table compares Greggs and Sprouts Farmers Market’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Greggs	N/A	N/A	N/A	$0.21	163.28
Sprouts Farmers Market	$6.84 billion	1.08	$258.86 million	$2.90	25.41

Sprouts Farmers Market has higher revenue and earnings than Greggs. Sprouts Farmers Market is trading at a lower price-to-earnings ratio than Greggs, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and target prices for Greggs and Sprouts Farmers Market, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Greggs	0	1	0	0	2.00
Sprouts Farmers Market	2	5	2	0	2.00

Sprouts Farmers Market has a consensus price target of $53.50, indicating a potential downside of 27.39%. Given Sprouts Farmers Market’s higher possible upside, analysts clearly believe Sprouts Farmers Market is more favorable than Greggs.

Insider and Institutional Ownership

42.1% of Greggs shares are held by institutional investors. 1.1% of Sprouts Farmers Market shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Greggs and Sprouts Farmers Market’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Greggs	N/A	N/A	N/A
Sprouts Farmers Market	4.25%	26.77%	9.16%

Summary

Sprouts Farmers Market beats Greggs on 8 of the 10 factors compared between the two stocks.

About Greggs

Greggs plc operates as a food-on-the-go retailer in the United Kingdom. It offers a range of fresh bakery products, sandwiches, and drinks. The company sells products to franchise and wholesale partners for sale in their own outlets. It is also involved in the property holding, non-trading, and trustee businesses. The company also operates through its own shops. Greggs plc was founded in 1939 and is headquartered in Newcastle upon Tyne, the United Kingdom.

About Sprouts Farmers Market

Sprouts Farmers Market, Inc., together with its subsidiaries, engages in the retailing of fresh, natural, and organic food products under the Sprouts brand in the United States. It offers perishable product categories, including fresh produce, meat and meat alternatives, seafood, deli, bakery, floral, and dairy and dairy alternatives; and non-perishable product categories, such as grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care. Sprouts Farmers Market, Inc. was founded in 1943 and is headquartered in Phoenix, Arizona.