SYY - Embedded Expectations Analysis - 2021 08 05
Sysco Corporation (SYY:USA) currently trades near recent averages relative to UAFRS-based (Uniform) earnings, with a 30.5x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about sustaining sales growth, staffing and inventory investments, and disruptions to their international operations.Specifically, management may lack confidence in their ability to manage their overall costs, improve sales in the U.S. foodservice segment, and increase investments in staffing and inventory. Furthermore, they may be exaggerating the strength of their positioning within the industry, their supply chain and sales capabilities, and the potential of their Sysco Shop tool. Moreover, they may lack confidence in their ability to successfully execute their pricing strategy and win new independent local customers. In addition, management may have concerns about supply chain disruptions, the sustainability of the demand ramp-up and the continued impact of pandemic-related restrictions on their geographical segments, especially in Europe. Finally, they may lack confidence in their ability to further reduce their overall debt, and they may be concerned about the overall pace of economic recovery.
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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