Should You Investigate The Chefs' Warehouse, Inc. (NASDAQ:CHEF) At US$34.43?

By
Simply Wall St
Published
February 25, 2020

The Chefs' Warehouse, Inc. (NASDAQ:CHEF), which is in the consumer retailing business, and is based in United States, saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$39.58 and falling to the lows of US$32.74. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Chefs' Warehouse's current trading price of US$34.43 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the 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 there are any catalysts for a price change.

Check out our latest analysis for Chefs' Warehouse

What's the opportunity in Chefs' Warehouse?

Great news for investors – Chefs' Warehouse is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $58.46, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Another thing to keep in mind is that Chefs' Warehouse’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What kind of growth will Chefs' Warehouse generate?

NasdaqGS:CHEF Past and Future Earnings, February 25th 2020

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 86% over the next couple of years, the future seems bright for Chefs' Warehouse. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since CHEF is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on CHEF for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CHEF. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Chefs' Warehouse. You can find everything you need to know about Chefs' Warehouse in the latest infographic research report. If you are no longer interested in Chefs' Warehouse, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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