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NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and generally higher debt management risk.
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Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 35.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Food & Staples Retailing industry average. The net income increased by 34.2% when compared to the same quarter one year prior, rising from $3.60 million to $4.84 million.
- CHEFS' WAREHOUSE INC has improved earnings per share by 11.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CHEFS' WAREHOUSE INC increased its bottom line by earning $0.77 versus $0.69 in the prior year. For the next year, the market is expecting a contraction of 0.6% in earnings ($0.77 versus $0.77).
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Food & Staples Retailing industry and the overall market, CHEFS' WAREHOUSE INC's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$4.11 million or 340.04% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
The Chefs' Warehouse, Inc. distributes specialty food products in the United States. Chefs' Warehouse has a market cap of $519.8 million and is part of the services sector and wholesale industry. Shares are down 28.6% year to date as of the close of trading on Wednesday.
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