SYY - Embedded Expectations Analysis - 2020 07 02
Sysco Corporation (SYY:USA) currently trades near recent averages relative to UAFRS-based (Uniform) earnings, with a 23.4x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may be concerned about their cost reduction efforts, volume declines, and their international operationsSpecifically, management may have concerns about the ability of retailer partners to provide work opportunities for their furloughed associates and the sustainability of order demand increases in restaurants. In addition, they may lack confidence in their ability to reduce expenses and flex inventory levels to match lower volumes, work with retail companies to meet customer needs, and drive further sales recovery. Furthermore, they may be concerned about international foodservice FX headwinds and their European business expense structure, and they may be overstating their anticipated cost savings
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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