At US$61.89, Is The Chefs' Warehouse, Inc. (NASDAQ:CHEF) Worth Looking At Closely?

While The Chefs' Warehouse, Inc. (NASDAQ:CHEF) might not have the largest market cap around , it saw a decent share price growth of 18% on the NASDAQGS over the last few months. While good news for shareholders, the company has traded much higher in the past year. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Chefs' Warehouse’s outlook and value based on the most recent financial data to see if the opportunity still exists.

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What's The Opportunity In Chefs' Warehouse?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Chefs' Warehouse’s ratio of 39.44x is above its peer average of 22.01x, which suggests the stock is trading at a higher price compared to the Consumer Retailing industry. But, is there another opportunity to buy low in the future? Given that Chefs' Warehouse’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

View our latest analysis for Chefs' Warehouse

Can we expect growth from Chefs' Warehouse?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Chefs' Warehouse's earnings over the next few years are expected to increase by 82%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in CHEF’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe CHEF should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on CHEF for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for CHEF, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Chefs' Warehouse as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Chefs' Warehouse you should know about.

If you are no longer interested in Chefs' Warehouse, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.