Financial Analysis: Chefs’ Warehouse (NASDAQ:CHEF) vs. Sprouts Farmers Market (NASDAQ:SFM)

Chefs’ Warehouse (NASDAQ:CHEF) and Sprouts Farmers Market (NASDAQ:SFM) are both mid-cap consumer staples companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, risk, earnings, valuation, analyst recommendations, dividends and institutional ownership.

Risk & Volatility

Chefs’ Warehouse has a beta of 1.38, indicating that its stock price is 38% more volatile than the S&P 500. Comparatively, Sprouts Farmers Market has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500.

Insider and Institutional Ownership

91.6% of Chefs’ Warehouse shares are held by institutional investors. 11.1% of Chefs’ Warehouse shares are held by company insiders. Comparatively, 1.3% of Sprouts Farmers Market shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Chefs’ Warehouse and Sprouts Farmers Market, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chefs’ Warehouse	0	1	5	1	3.00
Sprouts Farmers Market	1	6	7	0	2.43

Chefs’ Warehouse currently has a consensus target price of $115.67, suggesting a potential upside of 4.72%. Sprouts Farmers Market has a consensus target price of $92.25, suggesting a potential upside of 26.79%. Given Sprouts Farmers Market’s higher possible upside, analysts plainly believe Sprouts Farmers Market is more favorable than Chefs’ Warehouse.

Profitability

This table compares Chefs’ Warehouse and Sprouts Farmers Market’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chefs’ Warehouse	2.09%	16.95%	5.19%
Sprouts Farmers Market	5.58%	34.84%	11.99%

Valuation & Earnings

This table compares Chefs’ Warehouse and Sprouts Farmers Market”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chefs’ Warehouse	$4.39 billion	1.03	$72.36 million	$2.10	52.60
Sprouts Farmers Market	$9.00 billion	0.75	$523.67 million	$5.22	13.94

Sprouts Farmers Market has higher revenue and earnings than Chefs’ Warehouse. Sprouts Farmers Market is trading at a lower price-to-earnings ratio than Chefs’ Warehouse, indicating that it is currently the more affordable of the two stocks.

Summary

Sprouts Farmers Market beats Chefs’ Warehouse on 8 of the 15 factors compared between the two stocks.

About Chefs’ Warehouse

The Chefs’ Warehouse, Inc., together with its subsidiaries, distributes specialty food and center-of-the-plate products in the United States, the Middle East, and Canada. The company’s product portfolio includes specialty food products, such as artisan charcuterie, specialty cheeses, unique oils and vinegars, truffles, caviar, chocolate, and pastry products; and center-of-the-plate products consisting of custom cut beef, seafood, and hormone-free poultry, as well as broadline food products comprising cooking oils, butter, eggs, milk, and flour. The company serves menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos, and specialty food stores. It markets its center-of-the-plate products directly to consumers through a mail and e-commerce platform. The Chefs’ Warehouse, Inc. was founded in 1985 and is headquartered in Ridgefield, Connecticut.

About Sprouts Farmers Market

Sprouts Farmers Market, Inc., together with its subsidiaries, engages in the retailing of fresh, natural, and organic food products under the Sprouts brand in the United States. It offers perishable product categories, including fresh produce, meat and meat alternatives, seafood, deli, bakery, floral, and dairy and dairy alternatives; and non-perishable product categories, such as grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care. Sprouts Farmers Market, Inc. was founded in 1943 and is headquartered in Phoenix, Arizona.