Shares of specialty grocer Sprouts Farmers Market (SFM 1.54%) have rocketed 14.4% higher as of 12:55 p.m. ET on Thursday after the company delivered impressive first-quarter 2024 earnings results.

During Q1, Sprouts' sales and generally accepted accounting principles (GAAP) earnings per share (EPS) increased to $1.9 billion and $1.12, respectively, growing by 9% and 14%. These sales figures were well ahead of Wall Street's consensus estimates of $1.84 billion in sales and $1 in EPS, helping propel the stock to new all-time highs.

A magnificent first quarter from Sprouts Farmers Market

Specializing in attribute-driven foods (think gluten-free, organic, vegan, dairy-free, or grass-fed), Sprouts has successfully carved out its niche in the grocery industry. After adding seven new stores in Q1, the company has 414 locations across 23 states. Management plans to add 35 stores throughout 2024, setting out to reach its goal of 700 or more locations over the longer term.

However, Sprouts' existing locations did much of the heavy lifting in Q1, delivering comparable store growth rates of 4%, which is at the high end of management's expectations for 2024. The company's e-commerce sales led this charge, rising by 25% and now equaling 14% of Sprouts' total revenue.

Generating $174 million in free cash flow (FCF) in Q1, the company bought back $60 million of its shares. This stock buyback caused its share count to drop by 1% in Q1 alone, boosting its EPS.

Is Sprouts Farmers Market a buy?

With 76% of its stores in just five states -- California, Arizona, Colorado, Texas, and Florida -- Sprouts could still be in the early chapters of its growth story. Furthermore, its return on invested capital (ROIC) of 20% demonstrates management's aptitude for deploying capital in a highly profitable manner, making its expansion plans all the more alluring.

However, the market has taken notice lately, with the stock nearly tripling over the last three years. Now trading with a forward price-to-earnings (P/E) ratio of 24, Sprouts' combination of lofty valuation (for a grocer, at least) but excellent business make it a candidate for dollar-cost averaging buys over time.