Chefs’ Warehouse Stock is Giving a Window for Buyers

Specialty food distributer Chefs’ Warehouse NASDAQ: CHEF stock has made a double top as it peaks off pre-pandemic levels. The high-end food distributor supplies fine dining restaurants, hotels, and culinary schools through 2,200 suppliers to serve nearly 34,000 customers. From raw ingredients to artisan charcuterie, seafood, and custom beef cuts, the Company is a one-stop-shop. The post-pandemic return to work and the reopening trend has been a boon to the top and bottom line recovery and growth. The Company continues to make strategic acquisitions most notably to bolster its Southern California and Las Vegas special protein sales and Texas premium beef. Despite supply chain and logistics challenges, continued growth in travel, office, and college-related markets has led to consistent sales growth in October. Prudent investors seeking exposure in the premium high-end food distribution segment can watch for opportunistic pullbacks in shares of Chefs Warehouse.

Q3 FY 2021 Earnings Release

On Oct. 27, 2021, Chefs Warehouse released its fiscal fourth-quarter 2021 results for the quarter ending September 2021. The Company reported a profit of $0.12 per share beating out consensus analyst estimates for $0.08 per share by $0.04 per share. Revenues rose 90.7% year-over-year (YoY) to $484.3 million beating consensus analyst estimates for $450.08 million.  Chefs’ Warehouse CEO Chris Pappas commented, “Revenue trends remained strong as momentum from second-quarter customer and consumer demand continued into the third quarter. Moderate growth in market segments and business activity related to return to offices, travel, and hospitality contributed to a steady increase in weekly sales as the quarter progressed. We exited the quarter at approximately 103% of 2019 sales, inclusive of acquisitions completed in 2020 and 2021.”  

Conference Call Takeaways

CEO Pappas set the tone, “In September, limited growth in return to offices and hospitality-related activity contributed to a moderate increase in sales trends sequentially over August and July, and we exited the quarter at approximately 103% of 2019 sales.” He continued, “During October, we completed two acquisitions that will contribute to our continued growth as a provider of choice for high-end center-of-the-plate product lines to our customers nationally. On the West Coast, we added Silver State Meats, the premier provider of specialty proteins in the greater Las Vegas metro area. We are excited to partner with the Silver State team as their high-touch, high-quality service model will serve as a great complement to our existing specialty business in Las Vegas. This acquisition will also provide us with a bridge to growing our Southern California specialty protein sales until we implement center-of-the-plate processing in our new LA facility, which we currently expect to be opening in 2022. In Texas, we acquired certain assets of Martin Preferred Foods. This will facilitate accelerated growth of our premium Allen Brothers brands to our growing customer base in the Lone Star State. Regarding recent business activity, recent sales trends have continued in excess of 2019 sales consistent with the final weeks of the third quarter. Continued modest growth in travel, office building and college-related markets combined with favorable fall weather led to moderate week-over-week sales progress during October.” CEO Pappas concluded, “Despite the ongoing challenges in the labor and supply chain environment, our team at Chef's Warehouse continues to focus on sourcing marketing and delivering our high-quality product and high-touch service model to our customers. If anything, the last few months have strengthened our confidence in both the future growth of the culinary industry at large and the investments we at Chef's are making in market and category expansion and adding key talent and partners as we look forward to returning to above-average industry growth. I would like to thank all of our CW team members for their dedication and resilience as we move forward towards achieving, our medium-term and long-term goals.”

CHEF Opportunistic Price Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for CHEF stock. The weekly rifle chart recently peaked off the $37.90 Fibonacci (fib) level. The sharp sell-off caused the weekly stochastic to fall back down through the 80-band with a mini inverse pup. The weekly 5-period moving average (MA) is sloping down at $33.06 followed by the 15-period MA at $32.17. The weekly lower Bollinger Bands sit at the $24.40 fib. The daily rifle chart has been in a downtrend with a falling 5-period MA resistance at $31.09 followed by the 15-period MA at $32.32. The daily stochastic is stalled at the 10-band as it attempts a mini pup but could cross back down. The daily market structure high (MSH) sell triggered on the breakdown under $35.37. Bulls will need to protect the daily market structure low (MSL) buy trigger at $28.98. The daily lower BBs sit at $28.68. Prudent investors can watch for opportunistic pullbacks at the $29.64 fib, $28.15 fib, $27.55 fib, $26.22 level, $24.40 fib, and the $23.25 fib level. Upside trajectories range from the $37.90 fib up towards the $54.96 fib.