On Wednesday, BMO Capital Markets sustained its positive outlook on The Chefs' Warehouse, Inc (NASDAQ: NASDAQ:CHEF), elevating its price target to $55 from the previous $50, while reiterating an Outperform rating on the stock. The adjustment follows the company's third-quarter 2024 financial performance, which aligned with expectations, and a slight increase in the low end of its adjusted EBITDA guidance.
The Chefs' Warehouse, a premier distributor of specialty food products in the United States, reported quarterly results that matched analyst projections. The company also exhibited confidence in its ability to continue growing its EBITDA, a measure of a company's operating performance. This optimism is reflected in the slight upward adjustment of its EBITDA forecast, providing a more promising financial outlook.
Despite the third quarter being affected by shifts in post-COVID seasonality that may have tempered results, BMO Capital anticipates these effects could transition into a more robust fourth quarter in 2024. The firm suggests that The Chefs' Warehouse has laid out conservative plans for the upcoming quarter, which may offer room for positive surprises.
BMO Capital also noted The Chefs' Warehouse's commitment to achieving long-term EBITDA growth. The company's dedication to this goal is expected to be supported by new disclosures that could bolster investor confidence in the strategies being implemented to meet its targets for the year 2028.
In summary, BMO Capital underscores its conviction in The Chefs' Warehouse by maintaining the stock as its Top Small Cap Idea for 2024. The firm's reiterated Outperform rating and increased price target reflect a belief in the company's potential for sustained growth and financial success.
In other recent news, Chefs' Warehouse Inc. reported third-quarter revenue of $931.5 million, missing the consensus forecast of $936.51 million. The specialty food distributor also posted adjusted earnings per share at $0.36, exceeding estimates by $0.02. However, the company has lowered its full-year 2024 revenue guidance to a range of $3.71 billion to $3.77 billion, falling short of the $3.77 billion anticipated by analysts.
In the midst of these financial updates, the company also reported an increase in business and demand trends. Organic case count growth in its specialty category was 3.1%, with unique customers and placements rising by 4.7% and 10.8% respectively compared to the same period last year.
Gross profit for the company rose 8.2% year-over-year to $224.7 million, with gross margins expanding 58 basis points to 24.1%. For fiscal 2024, the company expects adjusted EBITDA to be between $210 million and $219 million. These are among the recent developments for Chefs' Warehouse Inc.
InvestingPro Insights
Recent data from InvestingPro adds depth to BMO Capital's optimistic outlook on The Chefs' Warehouse. The company's revenue growth of 19.87% over the last twelve months as of Q2 2024 aligns with the positive sentiment expressed in the article. This growth trajectory supports BMO's confidence in the company's potential for continued expansion.
InvestingPro Tips highlight that CHEF is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.44. This metric suggests the stock may be undervalued considering its growth prospects, potentially justifying BMO's increased price target.
Additionally, CHEF's high return over the last year, with a 127.23% price total return, underscores the market's recognition of the company's performance. This impressive return aligns with BMO Capital's decision to maintain CHEF as its Top Small Cap Idea for 2024.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into CHEF's financial health and market position.
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