Have you been paying attention to shares of The Chefs' WarehouseCHEF ? Shares have been on the move with the stock up 17.1% over the past month. CHEF hit a new 52-week high of $30.32 in the previous session. The Chefs' Warehouse has gained 37.3% since the start of the year compared to the -11% move for the Consumer Staples sector and the -11.2% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 9, 2018, The Chefs' Warehouse reported EPS of $0.03 versus the Zacks Consensus Estimate of $0.01 while it beat the consensus revenue estimate by 0.1%.
For the current fiscal year, The Chefs' Warehouse is expected to post earnings of $0.73 per share on $1.41 billion in revenues. This represents a 65.91% change in EPS on an 8.53% change in revenues. For the next fiscal year, the company is expected to earn $0.92 per share on $1.5 billion in revenues. This represents a year-over-year change of 25.34% and 6.15%, respectively.
The Chefs' Warehouse may be at a 52-week high right now, but what might the future hold for CHEF? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
The Chefs' Warehouse has a Value Score of B. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 38.6X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 23.5X versus its peer group's average of 12.3X. Additionally, the stock has a PEG ratio of 1.75. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
The Chefs' Warehouse, Inc. Price and Consensus
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, The Chefs' Warehouse currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 and Style Scores of A or B, it looks as if The Chefs' Warehouse fits the bill. Thus, it seems as though CHEF shares could have a bit more room to run in the near term.
How Does The Chefs' Warehouse Stack Up to the Competition?
Shares of The Chefs' Warehouse have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including United Natural Foods UNFI , Campbell Soup CPB , and Nestle SA NSRGY , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 40% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CHEF, even beyond its own solid fundamental situation.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.