Sysco (NYSE:SYY) Releases Earnings Results, Hits Expectations

Sysco (NYSE:SYY) issued its earnings results on Tuesday. The company reported $1.19 EPS for the quarter, meeting analysts’ consensus estimates of $1.19, FiscalAI reports. The business had revenue of $21.74 billion during the quarter, compared to analysts’ expectations of $22.02 billion. Sysco had a net margin of 2.12% and a return on equity of 79.24%. The company’s quarterly revenue was up 2.8% compared to the same quarter last year. During the same period in the prior year, the business earned $1.15 earnings per share.

Here are the key takeaways from Sysco’s conference call:

• Sysco met Q1 expectations with adjusted EPS of $1.19, up 3.5% year over year, while local case volume rose 2.7% despite soft restaurant traffic, Cyclospora disruption, fuel costs, and U.S. food deflation.
• Gross margin expanded 18 basis points to 18.6%, supported by local volume growth, stronger Sysco Brand penetration, sourcing savings, and effective cost management. International operations delivered 12.2% adjusted operating income growth, extending their streak of double-digit profit growth to 12 quarters.
• Management expects its AI and technology transformation to generate $100 million in FY2027 net cost savings and $500 million by FY2029. Early routing pilots improved pieces per mile by 2%-4%, while AI-powered procurement and the AI360 selling tool are showing encouraging productivity and sales results.
• Sysco remains on track to close its Restaurant Depot transaction by the end of fiscal Q3 after substantially completing responses to the FTC’s second request. The company also completed $16.75 billion of debt and equity financing at an effective debt cost of 5.8%, while highlighting potential procurement, cross-selling, and technology synergies.
• Sysco lowered its expected full-year reported sales growth to the lower end of its prior 6%-7% range because of weaker food inflation, now forecasting approximately 1%-1.5% inflation for the year. Management reaffirmed its 9%-11% adjusted EPS growth outlook, but expects the largest cost-savings benefits and profit acceleration to arrive in the second half.

Sysco Stock Down 1.8%

Shares of SYY traded down $1.38 during midday trading on Thursday, hitting $75.56. The company had a trading volume of 2,224,464 shares, compared to its average volume of 4,020,207. Sysco has a 1 year low of $68.19 and a 1 year high of $91.85. The company’s 50-day simple moving average is $80.17 and its 200-day simple moving average is $80.51. The company has a debt-to-equity ratio of 3.18, a quick ratio of 0.77 and a current ratio of 1.46. The firm has a market capitalization of $37.17 billion, a P/E ratio of 20.10, a P/E/G ratio of 2.08 and a beta of 0.66.

Sysco Dividend Announcement

The business also recently disclosed a quarterly dividend, which was paid on Friday, October 23rd. Stockholders of record on Friday, October 2nd were paid a $0.55 dividend. This represents a $2.20 annualized dividend and a dividend yield of 2.9%. The ex-dividend date was Friday, October 2nd. Sysco’s dividend payout ratio (DPR) is presently 60.11%.

Key Sysco News

Here are the key news stories impacting Sysco this week:

• Positive Sentiment: Sysco said local case volume grew 2.7% in the quarter, and its AI transformation program is intended to generate $100 million in savings in fiscal 2027—potential support for future growth and efficiency. Sysco: 3 Key Takeaways for Long-Term Investors
• Positive Sentiment: UBS said Sysco’s execution remains on track despite first-quarter challenges, offering a counterpoint to concerns about results and guidance. UBS on Sysco’s execution
• Neutral Sentiment: JPMorgan lowered its price target to $92 from $95, but the revised target still implies upside from the price cited in the report. JPMorgan adjusts Sysco price target
• Negative Sentiment: Quarterly EPS of $1.19 matched expectations, but revenue of $21.74 billion fell short of the $22.02 billion consensus. Softer sales guidance and a reported impact from a cyclosporiasis outbreak added to investor concerns. Sysco retreats on revenue miss and softer guidance
• Negative Sentiment: The planned $29.1 billion Jetro Restaurant Depot acquisition is awaiting FTC clearance. Deal-related costs weighed on first-quarter operating income, and a reported investor investigation puts added focus on regulatory and cost exposure. Investor investigation notice

Analyst Upgrades and Downgrades

Several research analysts have recently weighed in on the company. Morgan Stanley boosted their target price on Sysco from $88.00 to $91.00 and gave the stock an “equal weight” rating in a report on Thursday, October 15th. Wall Street Zen downgraded shares of Sysco from a “buy” rating to a “hold” rating in a research note on Saturday, October 24th. DA Davidson boosted their price objective on Sysco from $89.00 to $91.00 and gave the company a “buy” rating in a report on Wednesday, August 5th. Bank of America increased their target price on Sysco from $91.00 to $93.00 and gave the stock a “buy” rating in a research note on Monday, July 20th. Finally, Sanford C. Bernstein restated a “market perform” rating on shares of Sysco in a report on Wednesday. Eleven equities research analysts have rated the stock with a Buy rating, six have assigned a Hold rating and one has given a Sell rating to the company’s stock. According to MarketBeat, Sysco currently has an average rating of “Moderate Buy” and a consensus price target of $91.33.

Insider Activity at Sysco

In other news, EVP Ronald Phillips sold 960 shares of the firm’s stock in a transaction on Friday, September 11th. The shares were sold at an average price of $83.00, for a total value of $79,680.00. Following the sale, the executive vice president directly owned 49,852 shares in the company, valued at approximately $4,137,716. This trade represents a 1.89% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Over the last quarter, insiders have sold 15,525 shares of company stock valued at $1,299,736. Corporate insiders own 0.55% of the company’s stock.

About Sysco

Sysco Corporation is a global foodservice distribution company headquartered in Houston, Texas. It supplies food and related products to restaurants, healthcare and educational institutions, hotels, government facilities, and other foodservice operators.

The company distributes a broad range of products, including fresh and frozen foods, meat and seafood, produce, dairy products, canned and packaged goods, beverages, and specialty food items. Sysco also provides nonfood products such as kitchen and dining supplies, equipment, and cleaning products, along with services intended to help customers manage menus, procurement, and operations.

Founded in 1969, Sysco serves customers primarily across the United States and Canada, as well as in parts of Europe and other international markets.