Sysco's Sales and Profits Truck Ahead in 3Q, but Shares Fail to Offer Any Bargain
We don’t anticipate a change in narrow-moat Sysco’s $58 fair value estimate following third-quarter results (2% sales growth and a 52-basis-point gain in adjusted operating margins to 4.2%). However, we don’t believe the stock should whet investors’ appetites, with shares trading at a 25% premium to our valuation. While we view Sysco’s strategic course to bolster profits and stabilize sales favorably, we think the market is largely disregarding the plethora of headwinds that may dislodge Sysco f...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.
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