CHEF - I Cannot Justify The Valuation Of The Chefs' Warehouse
- CHEF is a distributor of specialty food in the United States and Canada.
- Since 2015, CHEF has been using leverage to acquire other businesses. The company appears to be growing more inorganically than organically.
- If CHEF does not continue its M&A activity because debt levels are significant, sales growth may decline.
- CHEF issued 1.875% convertible senior notes to repay certain borrowings. It means that note holders could convert their debt, and issue additional stock.
- CHEF trades at 21x-23x with an EBITDA margin of only 4%.
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I Cannot Justify The Valuation Of The Chefs' Warehouse