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1. Company Snapshot

1.a. Company Description

Sysco Corporation, through its subsidiaries, engages in the marketing and distribution of various food and related products primarily to the foodservice or food-away-from-home industry in the United States, Canada, the United Kingdom, France, and internationally.It operates through U.S. Foodservice Operations, International Foodservice Operations, SYGMA, and Other segments.The company distributes frozen foods, such as meats, seafood, fully prepared entrées, fruits, vegetables, and desserts; canned and dry foods; fresh meats and seafood; dairy products; beverage products; imported specialties; and fresh produce.


It also supplies various non-food items, including paper products comprising disposable napkins, plates, and cups; tableware consisting of China and silverware; cookware, which include pots, pans, and utensils; restaurant and kitchen equipment and supplies; and cleaning supplies.The company serves restaurants, hospitals and nursing homes, schools and colleges, hotels and motels, industrial caterers, and other foodservice venues.As of August 27, 2021, it operated 343 distribution facilities.


Sysco Corporation was incorporated in 1969 and is headquartered in Houston, Texas.

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1.b. Last Insights on SYY

Sysco Corporation's recent performance was driven by strong Q2 earnings, with margins expanding and local volumes improving. The company's international business showed significant growth, with eight consecutive quarters of double-digit profit growth. Total revenue reached nearly $21 billion, a 3% increase from the prior year, while adjusted EPS growth was 6.5%. The company's strategic initiatives and productivity gains also contributed to higher profits.

1.c. Company Highlights

2. Sysco's Strong Q2 Results and Raised FY 2026 Guidance

Sysco delivered a robust financial performance in the second quarter of fiscal year 2026, with total revenue reaching nearly $21 billion, representing a 3% growth rate versus the prior year. The company's gross profit was $3.8 billion, up 3.9%, with gross margins expanding 15 basis points to 18.3%. Adjusted EPS came in at $0.99, beating estimates of $0.976. The strong results were driven by improving case volume trends, strengthening gross margin performance, and disciplined expense management.

Publication Date: Feb -02

📋 Highlights
  • Revised Full-Year Earnings Guidance:: Raised FY 2026 adjusted EPS to high end of $4.50–$4.60 range, reflecting strong Q2 performance and guidance increase.
  • Revenue Growth:: Total revenue reached $21 billion (+3% YoY), driven by positive case volume growth across all business units, including U.S. Foodservice local case volume up 1.2%.
  • Gross Margin Expansion:: Gross profit hit $3.8 billion (+3.9%), with margins expanding 15 bps to 18.3%, aided by strategic sourcing and moderated inflation (1.4% in U.S. Broadline).
  • Free Cash Flow Surge:: Year-to-date free cash flow grew 25% to $413 million, supported by strong earnings quality and operational efficiencies.
  • Operating Income Growth:: Adjusted operating income rose to $870 million (+3.3% YoY), with EBITDA reaching $1 billion, driven by volume gains and international segment performance.

Revenue Growth and Segment Performance

Sysco's U.S. Foodservice local case volume was up 1.2% in the quarter, an improvement of 140 basis points versus Q1. The company delivered positive case growth in its local, specialty, national, and international business units. The international segment and SYGMA also reported solid results, with SYGMA's operating income growing 10.5%. The company's revenue growth is expected to continue, with a raised guidance for FY 2026 net sales growth to approximately 3% to 5% to $84 billion to $85 billion.

Expense Management and Profitability

Adjusted operating expenses were $3 billion for the quarter, or 14.4% of sales, a 15 basis points increase from the prior year. However, the company reported strong adjusted operating income growth to $870 million, reflecting continued improvements in local case volumes and strong growth in the international segment. Adjusted EBITDA was $1 billion, up 3.3% versus the prior year. The company's focus on cost savings and efficiencies has enabled it to maintain a healthy financial profile.

Valuation and Outlook

Sysco's current valuation metrics, such as a P/E Ratio of 22.37 and EV/EBITDA of 13.26, indicate a relatively stable and profitable company. The company's raised guidance for FY 2026 adjusted EPS to be at the high end of the range of $4.50 to $4.60, representing a growth rate of approximately 5% to 7%. Analysts estimate next year's revenue growth at 5.0%, indicating a continued positive outlook for the company. With a healthy balance sheet and a robust financial performance, Sysco is well-positioned for future growth.

Dividend and Shareholder Returns

Sysco remains committed to returning value to its shareholders, with a dividend yield of 2.54% and a share repurchase plan of approximately $1 billion for the year. The company's expected payout for FY 2026 equates to a 6% year-over-year increase on a per-share basis. With a strong financial profile and a focus on shareholder returns, Sysco is an attractive investment opportunity.

3. NewsRoom

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Consumer Staples ETFs: Sector-Wide Defense or a Food-and-Beverage Tilt? VDC vs. PBJ

Feb -10

Source: fool.com

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XLP Provides Broad Staples Exposure, While PBJ Focuses on a Specific Sub-Sector. Which ETF is Right for Average Investors?

Feb -10

Source:

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Candriam S.C.A. Purchases 76,160 Shares of Sysco Corporation $SYY

Feb -10

Source: defenseworld.net

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Sysco (NYSE:SYY) & Cuisine Solutions (OTCMKTS:CUSI) Critical Comparison

Feb -10

Source: defenseworld.net

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ProShare Advisors LLC Sells 76,788 Shares of Sysco Corporation $SYY

Feb -09

Source: defenseworld.net

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Sysco Corporation (NYSE:SYY) Given Consensus Rating of “Moderate Buy” by Analysts

Feb -09

Source: defenseworld.net

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4 Miscellaneous Food Stocks Poised for Growth in a Difficult Market

Feb -03

Source: zacks.com

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Sysco to Webcast Presentation at the CAGNY 2026 Conference

Feb -03

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.80%)

6. Segments

U.S. Foodservice Operations

Expected Growth: 3.5%

Sysco's U.S. Foodservice Operations growth of 3.5% is driven by increased demand for convenient food solutions, expanding customer base, and strategic acquisitions. The company's focus on digital transformation, logistics optimization, and customer relationship management also contribute to its growth. Additionally, the ongoing recovery in the foodservice industry post-pandemic supports Sysco's revenue expansion.

International Foodservice Operations

Expected Growth: 4.5%

Sysco's International Foodservice Operations growth of 4.5% is driven by expanding customer base, increasing demand for food distribution services, and strategic acquisitions. The company leverages its scale and expertise to capitalize on emerging markets, improve operational efficiency, and enhance its product offerings, resulting in steady growth and market share gains.

SYGMA

Expected Growth: 4.8%

SYGMA's 4.8% growth is driven by Sysco's strategic expansion into the European market, increasing customer base, and rising demand for customized food distribution services. The segment's growth is also attributed to operational efficiencies and effective integration of acquired businesses, leading to improved profitability and market share gains.

Other

Expected Growth: 2.8%

Sysco's 'Other' segment growth of 2.8% is driven by increased demand for specialty products, expanded customer relationships, and strategic acquisitions. The segment's performance is also influenced by price inflation and a recovering economy, leading to increased foodservice and hospitality industry sales.

7. Detailed Products

Food and Beverage Products

Sysco Corporation offers a wide range of food and beverage products, including fresh produce, meats, dairy products, canned and packaged goods, and specialty items such as organic and gourmet products.

SySysco's Guest Supply

Sysco's Guest Supply segment provides a range of guest supplies, including linens, toiletries, and amenities, to hotels, restaurants, and other food service providers.

Sysco's Uniforms and Footwear

Sysco's Uniforms and Footwear segment provides a range of uniforms, footwear, and accessories to food service providers, including restaurants, hotels, and healthcare facilities.

Sysco's Equipment and Supplies

Sysco's Equipment and Supplies segment provides a range of equipment and supplies, including kitchen equipment, tableware, and cleaning supplies, to food service providers.

Sysco's Specialty Products

Sysco's Specialty Products segment provides a range of specialty products, including ethnic and gourmet foods, organic and natural products, and specialty equipment.

8. Sysco Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Sysco Corporation operates in the food distribution industry, where substitutes are limited. Customers rely on Sysco for a wide range of products and services, making it difficult for substitutes to emerge.

Bargaining Power Of Customers

Sysco's customers include restaurants, healthcare facilities, and other foodservice providers. While these customers have some bargaining power, Sysco's large market share and extensive product offerings give it a degree of pricing power.

Bargaining Power Of Suppliers

Sysco sources products from a large number of suppliers, which reduces the bargaining power of any one supplier. However, some suppliers may have significant negotiating power due to the uniqueness of their products.

Threat Of New Entrants

The food distribution industry has high barriers to entry, including significant capital requirements, complex logistics, and established relationships with suppliers and customers. This makes it difficult for new entrants to compete with Sysco.

Intensity Of Rivalry

The food distribution industry is highly competitive, with several large players competing for market share. Sysco faces intense rivalry from companies like US Foods and Gordon Food Service.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 87.44%
Debt Cost 6.15%
Equity Weight 12.56%
Equity Cost 8.35%
WACC 6.43%
Leverage 695.97%

11. Quality Control: Sysco Corporation passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Altria

A-Score: 7.6/10

Value: 6.8

Growth: 5.8

Quality: 6.5

Yield: 10.0

Momentum: 7.0

Volatility: 9.7

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Sysco

A-Score: 6.2/10

Value: 4.2

Growth: 6.8

Quality: 4.0

Yield: 6.0

Momentum: 6.0

Volatility: 10.0

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Kraft Heinz

A-Score: 6.1/10

Value: 8.9

Growth: 3.8

Quality: 4.3

Yield: 9.0

Momentum: 1.5

Volatility: 9.3

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Andersons

A-Score: 5.5/10

Value: 6.9

Growth: 5.9

Quality: 3.6

Yield: 4.0

Momentum: 7.0

Volatility: 5.7

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Walmart

A-Score: 5.4/10

Value: 2.5

Growth: 5.4

Quality: 5.3

Yield: 2.0

Momentum: 7.5

Volatility: 9.3

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Costco Wholesale

A-Score: 5.2/10

Value: 2.0

Growth: 6.8

Quality: 5.7

Yield: 2.0

Momentum: 5.0

Volatility: 10.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

88.04$

Current Price

88.04$

Potential

-0.00%

Expected Cash-Flows