Despite Leading Positions, We Believe the Top Three Food Distributors Boast Lofty Valuations
Although we believe narrow-moat Sysco, no-moat US Foods, and no-moat Performance Foods hold leading positions in the $300 billion foodservice industry, we see a competitive environment constraining profitability. As such, we don’t view current valuations as attractive and believe investors should wait for a better margin of safety. We estimate that the three leading companies hold around 31% of the market, but the industry is locally competitive and fragmented, with around 15,000 domestic distri...Sysco, acting through its subsidiaries and divisions, is a distributor of food and related products primarily to the foodservice or food-away-from-home industry. The company has three reportable segments: United States Foodservice Operations, which primarily include United States Broadline operations, which distribute a line of food products, including custom-cut meat, seafood, specialty produce, specialty imports and a variety of non-food products; International Foodservice Operations, which include operations in the Americas and Europe, which distribute a line of food products and a variety of non-food products; and SYGMA, which consists of its United States customized distribution subsidiary.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
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