Why The Chefs' Warehouse Inc. Shares Plummeted 21% Last Month

The specialty food vendor took a dive on a weak earnings report.

Jeremy Bowman
Jeremy Bowman
Jun 10, 2016 at 7:19AM
Consumer Goods

Image source: Chefs' Warehouse.

What: Shares of The Chefs' Warehouse Inc. (NASDAQ:CHEF) got sliced and diced last month, falling 21%, according to data from S&P Global Market Intelligence, thanks to a disappointing first-quarter earnings report.

CHEF Chart

CHEF data by YCharts

So what: As the chart above shows, shares of The Chefs' Warehouse plunged 17% on May 4 as the company fell short of expectations. It posted an adjusted earnings per share of $0.05, below the analyst consensus at $0.09, while revenue jumped 33% to $262.4 million, primarily driven by the Del Monte Meat acquisition. However, that also missed estimates of $265 million.

CEO Chris Pappas said, "The core specialty business is off to a strong start," and also noted that the protein division experienced strong gross margin expansion. 

Now what: For the full year, the seller of specialty food products said it expects revenue of $1.15 billion to $1.18 billion and adjusted earnings per share of $0.77-$0.83, a reduction from prior guidance and below analyst expectations of $0.85.  

The company's ability to integrate Del Monte Meat should go a long way to determining its future growth. Chefs' Warehouse has recently made a number of acquisitions, driving revenue nearly three times higher over the last five years; however, earnings have been mostly flat. The opportunity appears to be there, but the company has yet to take advantage.