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BTIG called Chefs’ Warehouse (NASDAQ:CHEF) a unique opportunity for long-term investors, with shares seen as significantly undervalued.
Analyst Peter Saleh said the firm is perplexed by Chefs’ Warehouse stock performance over the past 12 to 18 months, as the stock tumbled close to trough multiples even as sales and profit continued to climb to record levels for the food distributor.
“Currently, shares are down over 16% year-to-date and near trough EV/EBITDA and P/E multiples when excluding COVID-era volatility. Shares are trading at 8.5x and 7.5x our and consensus EV/EBITDA forecasts for 2023 and 2024, respectively, right around the three-year trough multiple and about 5.0x below the three- and five-year historical average.”
Saleh noted that if CHEF shares were to recover back to the average EV/EBITDA multiple of 12.5X from the past three or five years, the stock would swap hands at $49 and give new investors a 70% pop. CHEF is also seen as undervalued when looking at P/E, with the stock currently trading at 16.X BTIG’s 2024 EPS estimate, well below the 35.6X average multiple from the past five years.
BTIG has a Buy rating on Chefs’ Warehouse (CHEF) and called the stock its top small/mid-cap pick. The firm’s price target is $48 to represent upside potential of more than 70% for the stock.
Earnings review: Chefs’ Warehouse (CHEF) reported sales rose 36.1% year-over-year in FQ1 to $882M and adjusted EBITDA was up 13% to $51.1M. Organic sales were up 8% during the quarter from a year ago and organic case count was 10% higher.
