Chefs' Warehouse, Inc. (NASDAQ: CHEF)

Sector: Consumer Defensive Industry: Food Distribution CIK: 0001517175
Market Cap 2.62 Bn
P/B 4.54
P/E 35.11
P/S 0.65
ROIC (Qtr) 6.63
Div Yield % 0.00
Rev 1y % (Qtr) 9.65
Total Debt (Qtr) 954.12 Mn
Debt/Equity (Qtr) 1.65
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About

Chefs' Warehouse, Inc., often recognized by its stock symbol CHEF, operates as a leading distributor of specialty food and center-of-the-plate products in the United States, the Middle East, and Canada. Established over 35 years ago, the company has carved a niche for itself in the foodservice industry. Chefs' Warehouse caters specifically to the needs of chefs who run independent restaurants, fine dining establishments, hotels, caterers, culinary schools, bakeries, and other foodservice businesses. The company's primary business activities revolve...

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Investment thesis

Bull case

  • Robust free cash flow of 86.64M exceeds capital expenditure of 41.72M by 2.08x, indicating strong organic growth funding capability.
  • Operating cash flow of 128.36M fully covers other non-current liabilities 25.14M by 5.11x, showing strong long-term stability.
  • Tangible assets of 1.42B provide robust 10.70x coverage of other current liabilities 132.26M, indicating strong asset backing.
  • Robust tangible asset base of 1.42B provides 3.05x coverage of working capital 463.24M, indicating strong operational backing.
  • Operating cash flow of 128.36M provides strong 6.18x coverage of tax liabilities 20.78M, showing excellent fiscal position.

Bear case

  • Operating cash flow of 128.36M barely covers its investment activities of (41.72M), with a coverage ratio of -3.08, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 65.06M against inventory of 385.39M, the 0.17 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating earnings of 148.34M show weak coverage of depreciation charges of 74.59M, with a 1.99 ratio indicating high capital intensity and potential reinvestment needs.
  • Operating cash flow of 128.36M barely covers operating expenses of (1.30M) with a -98.96 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • Free cash flow of 86.64M represents just -2.31x of debt issuance (37.45M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Food Distribution
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SYY Sysco Corp 52.49 Bn 48.75 1.21 14.97 Bn
2 USFD US Foods Holding Corp. 22.03 Bn 32.59 0.56 5.37 Bn
3 PFGC Performance Food Group Co 15.24 Bn 44.17 0.23 7.99 Bn
4 CHEF Chefs' Warehouse, Inc. 2.62 Bn 35.11 0.65 0.95 Bn
5 UNFI United Natural Foods Inc 2.38 Bn -23.56 0.07 3.47 Bn
6 ANDE Andersons, Inc. 1.88 Bn 20.94 0.34 0.77 Bn
7 AVO Mission Produce, Inc. 1.03 Bn 27.23 0.74 0.20 Bn
8 CVGW Calavo Growers Inc 0.45 Bn -33.31 0.43 0.02 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.80 1.05
EV to Cash from Ops. EV/CFO 26.90 34.23
EV to Debt EV to Debt 3.62 13.37
EV to EBIT EV/EBIT 23.28 164.56
EV to EBITDA EV/EBITDA 15.49 4.40
EV to Free Cash Flow [EV/FCF] EV/FCF 39.85 22.08
EV to Market Cap EV to Market Cap 1.32 1.45
EV to Revenue EV/Rev 0.85 0.53
Price to Book Value [P/B] P/B 4.54 2.85
Price to Earnings [P/E] P/E 35.11 13.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.57
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 21.05
Dividend per Basic Share Div per Share (Qtr) 0.00 0.44
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 8.21
Interest Coverage Int. cover (Qtr) 3.41 7.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 34.23 -12.24
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 28.31 35.81
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 32.53
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 31.71 65.49
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 22.49 -8.59
EBIT Growth (1y) % EBIT 1y % (Qtr) 23.71 21.40
EBT Growth (1y) % EBT 1y % (Qtr) 47.36 -278.84
EPS Growth (1y) % EPS 1y % (Qtr) 54.76 -67.04
FCF Growth (1y) % FCF 1y % (Qtr) 48.81 82.95
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 9.72 1.59
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 2.11 2.79
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.07
Cash Ratio Cash Ratio (Qtr) 0.16 0.34
Current Ratio Curr Ratio (Qtr) 2.14 2.65
Debt to Equity Ratio Debt/Equity (Qtr) 1.65 1.41
Interest Cover Ratio Int Coverage (Qtr) 3.41 7.20
Times Interest Earned Times Interest Earned (Qtr) 3.41 7.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 5.50 4.45
EBIT Margin % EBIT Margin % (Qtr) 3.67 8.39
EBT Margin % EBT Margin % (Qtr) 2.59 4.17
Gross Margin % Gross Margin % (Qtr) 24.20 24.60
Net Profit Margin % Net Margin % (Qtr) 1.80 3.22