Strength Seen in Chefs’ Warehouse (CHEF): Can Its 5.1% Jump Turn into More Strength?

Chefs’ Warehouse (CHEF) shares ended the last trading session 5.1% higher at $34.64. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock’s 1.4% gain over the past four weeks.

Shares of Chefs’ Warehouse got a boost as the company’s raised its guidance for full-year 2022, on the basis of present business trends and view for the rest of the year. Management now anticipates net sales to be $2.325-$2.425 billion; gross profit of $542.0-$565.0 million and adjusted EBITDA in the band of $130.0-$140.0 million. Robust customer demand and the company’s ability to offer products efficiently have been driving its performance.

This distributor of specialty food products is expected to post quarterly earnings of $0.23 per share in its upcoming report, which represents a year-over-year change of +475%. Revenues are expected to be $558.95 million, up 32.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimates revisions are strongly correlated with near-term stock price movements.

For Chefs’ Warehouse, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock’s price usually doesn’t keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on CHEF going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>

Chefs’ Warehouse is a member of the Zacks Food – Miscellaneous industry. One other stock in the same industry, Freshpet (FRPT), finished the last trading session 1% lower at $52.93. FRPT has returned -11.7% over the past month.

For Freshpet, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.14. This represents a change of +17.7% from what the company reported a year ago. Freshpet currently has a Zacks Rank of #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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