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 is overvalued based on earnings compared to the US Consumer Retailing industry average.
Chefs' Warehouse is overvalued based on earnings compared to the US market.
Price based on expected Growth
Chefs' Warehouse's expected growth come at a high price?
Chefs' Warehouse is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on
Chefs' Warehouse is overvalued based on assets compared to the US Consumer Retailing industry average.
Discounted cash flow (2 Stage Free Cash Flow to Equity)
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value. We use
analyst's estimates of cash flows going forward 5 years.
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is
limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($611,930,355).
The risk free rate of
2.47% is from the 10 year government bond rate in
The bottom-up beta is estimated by analysing other companies in the same
The Equity Risk Premium is calculated by subtracting the risk free rate from
the market return premium (7.53%) (source: Buffet).
The dividend discount model is automatically used for companies in the
following industries: Banks, Insurance, Real Estate Investment Trusts (REITs),
Diversified Financial Services and Capital Markets.
The future performance of a company is measured in the same way as past
performance, by looking at estimated
and how much profit it is expected to make.
Future estimates come from
professional analysts. Just like forecasting the weather, they don’t always get
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
expected to grow at an
Chefs' Warehouse's earnings growth is expected to exceed the low risk savings rate of 4.5%.
Growth vs Market Checks
Chefs' Warehouse's earnings growth is expected to exceed the US market average.
Chefs' Warehouse's revenue growth is positive but not above the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
High Growth Checks
Chefs' Warehouse's earnings are expected to grow by 18.6% yearly, however this is not considered high growth (20% yearly).
Chefs' Warehouse's revenue is expected to grow by 5.7% 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.
Performance in 3 years
In the same way as past performance we look at the future estimated return
(profit) compared to the available
funds. We do this looking forward 3 years.
Chefs' Warehouse is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).
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
3/6, 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 long term commitments exceed its cash and other short term assets.
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 not covered by short term assets, assets are 0.9x 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.
Chefs' Warehouse's level of debt (127.8%) compared to net worth is high (greater than 40%).
The level of debt compared to net worth has been reduced over the past 5 years (317% vs 127.8% today).
Debt is not well covered by operating cash flow (9.9%, less than 20% of total debt).
Interest payments on debt are not well covered by earnings (EBIT is 1.8x annual interest expense, ideally 3x coverage).
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 from its formation to January 1, 2007. He serves as a Director at F.A.B., Inc. 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 been consistent with company performance over the past year.
Chris's compensation is higher than average for a company of this size and profit level.
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 and Vice Chairman
Chief Human Resources Officer
CFO, Executive VP of Finance & Assistant Secretary
Chief Accounting Officer
Executive Vice President of Supply Chain and Business Intelligence
Executive Vice President of Business Intelligence
Regional Vice President of Eastern Region
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.
Why The Chefs' Warehouse Inc's (NASDAQ:CHEF) ROE Of 6.86% Does Not Tell The Whole Story
See our latest analysis for Chefs' Warehouse Peeling the layers of ROE – trisecting a company’s profitability Return on Equity (ROE) is a measure of Chefs' Warehouse’s profit relative to its shareholders’ equity. … Return on Equity = Net Profit ÷ Shareholders Equity ROE is measured against cost of equity in order to determine the efficiency of Chefs' Warehouse’s equity capital deployed. … Since Chefs' Warehouse’s return does not cover its cost, with a difference of -1.64%, this means its current use of equity is not efficient and not sustainable.
Investors Are Undervaluing The Chefs' Warehouse Inc (NASDAQ:CHEF) By 27.16%, Here Is My Intrinsic Value Calculation
The sum of these cash flows is then discounted to today's value. … 5-year cash flow estimate 2017 2018 2019 2020 2021 Levered FCF ($, Millions) $-2.20 $36.10 $45.70 $53.00 $59.10 Source Analyst x1 Analyst x1 Analyst x1 Analyst x1 Analyst x1 Present Value Discounted @ 8.49% $-2.03 $30.67 $35.78 $38.25 $39.32 Present Value of 5-year Cash Flow (PVCF)= $142 We now need to calculate the Terminal Value, which accounts for all the future cash flows after the five years. … Terminal Value (TV) = FCF2021 × (1 + g) ÷ (r – g) = $59 × (1 + 2.5%) ÷ (8.5% – 2.5%) = $1,005 Present Value of Terminal Value (PVTV) = TV / (1 + r)5 = $1,005 / ( 1 + 8.5%)5 = $669 The total value, or equity value, is then the sum of the present value of the cash flows, which in this case is $811.
What Should We Expect From The Chefs' Warehouse Inc's (CHEF) Earnings Over The Next Year?
In September 2017, The Chefs' Warehouse Inc (NASDAQ:CHEF) announced its latest earnings update. … To understand the overall trajectory of CHEF's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope. … NasdaqGS:CHEF Future Profit Nov 30th 17 By 2020, CHEF's earnings should reach $5M, from current levels of $3M, resulting in an annual growth rate of 23.84%.
What Are Analysts Saying About The Future Of The Chefs' Warehouse Inc's (CHEF) Business?
The Chefs' Warehouse Inc (NASDAQ:CHEF)’s impressive earnings growth per share is expected to be a big double-digit 56.94% over the next three years. … This indicates a relatively solid earnings per share growth rate of 56.94% over the next few years, which is an optimistic outlook in the near term. … CHEF’s earnings growth the past couple of years was 95.04% which indicates that the company's past performance is quite revealing of future outcome.
The Chefs' Warehouse, Inc., together with its subsidiaries, distributes specialty food products in the United States and Canada. Its product portfolio includes approximately 43,000 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 Chefs' Warehouse, Inc. markets its center-of-the-plate products directly to consumers through a mail and e-commerce platform. The company was founded in 1985 and is headquartered in Ridgefield, Connecticut.
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