Sprouts (NASDAQ:SFM) reported revenues of $743.8 million, which beat the street's estimate of $741.05 million. This was a 20% increase from last year. Same store sales increased 9.5% and the two year combined pro forma same store sales growth was 20.3%. Adjusted net income increased 68% to $30.2 million from $18 million last year. Adjusted earnings per share went from 14 cents a share last year to 20 cents per share this quarter. Adjusted EBITDA was $69.1 million which was a 31% increase. Gross profit was 30.1% which was consistent with the same period last year. Direct store expense decreased 60 basis points from last year to 19.2%.
Guidance for the third quarter is for same store sales to be in the range of 8.5% to 9.5%. Two year combined pro forma comparable same store sales are expected to be between 18.5% and 19.5%. The company raised its full year guidance. Net sales growth is now expected to be between 19% and 20%. The company now expects to open 24 stores this year. Its new adjusted EBITDA growth is expected to be 25% to 27%. Adjusted net income growth is now expected to be 45% plus. The new adjusted diluted earnings per share is expected to be 65 cents to 67 cents. Adjusted diluted earnings per share growth is expected to be 35% to 40%.
Since my last article "Firing On All Cylinders, Yet Trading At A 52-Week Low- Sprouts Farmers Market", the stock has increased. Right now, the company is still suffering from having such a high multiple at its IPO. The company was overvalued at $40, but now that it has corrected to $30 and has reported spectacular same store sales growth rates, it has become undervalued. The stock will increase by the end of the year and it is even more of a strong buy than when I recommended it back in May.
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