Discounted Cash Flow Calculation for DB:2CF using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
DB:2CF DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Chefs' Warehouse's share price is below the future cash flow value, and at a moderate discount (> 20%).
Chefs' Warehouse's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Chefs' Warehouse's earnings available for a low price, and how does
this compare to other companies in the same industry?
Chefs' Warehouse's earnings are expected to grow by 17.6% yearly, however this is not considered high growth (20% yearly).
Chefs' Warehouse's revenue is expected to grow by 6.1% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Chefs' Warehouse's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
4/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Chefs' Warehouse's finances.
The net worth of a company is the difference between its assets and liabilities.
Chefs' Warehouse is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
Chefs' Warehouse's cash and other short term assets cover its long term commitments.
This treemap shows a more detailed breakdown of
Chefs' Warehouse's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of physical assets or inventory.
Debt is covered by short term assets, assets are 1.2x debt.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Christopher Pappas, also known as Chris, serves as Chairman, Chief Executive Officer and President at Qzina Specialty Foods, Inc. Mr. Pappas Founded The Chefs' Warehouse, Inc., an affiliate of DAIRYLAND Inc. in 1985 and has been its Chairman, President and Chief executive officer since March 1, 2011, April 11, 2009 and 1985 respectively. Mr. Pappas oversees all of business activities, with a focus on product procurement, sales, marketing, strategy development, business development and operations. He served as the President of Chefs' Warehouse Holdings LLC since its formation until January 1, 2007. Mr. C. Pappas currently serves on the board of the International Foodservice Distributors Association. He serves as a Director at F.A.B., Inc. and Director of The Chefs' Warehouse, Inc since 2011 Mr. Pappas played basketball professionally in Europe for several years following his graduation from Adelphi University in 1981 with a Bachelor of Arts degree in Business Administration.
Chris's compensation has increased by more than 20% in the past year.
Chris's remuneration is higher than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Chefs' Warehouse management team is over 5 years, this suggests they are a seasoned and experienced team.
Founder & Vice Chairman
CFO & Assistant Secretary
Chief Human Resources Officer
Chief Accounting Officer
Executive Vice President
Executive Vice President of Supply Chain & Business Intelligence
Executive Vice President of Business Intelligence
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the Chefs' Warehouse board of directors is about average.
The Chefs' Warehouse, Inc., together with its subsidiaries, distributes specialty food products in the United States and Canada. Its product portfolio includes approximately 55,000 stock-keeping units comprising specialty food products, such as artisan charcuterie, specialty cheeses, unique oils and vinegars, truffles, caviar, chocolate, and pastry products. The company also offers a line of center-of-the-plate products, including custom cut beef, seafood, and hormone-free poultry, as well as food products, such as cooking oils, butter, eggs, milk, and flour. It serves menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos, and specialty food stores. The company markets its center-of-the-plate products directly to consumers through a mail and e-commerce platform. The Chefs' Warehouse, Inc. was founded in 1985 and is headquartered in Ridgefield, Connecticut.
Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us.