Sysco Reports Strong Q2 Results, Raises Adjusted EPS Guidance
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2d ago
0mins
Source: seekingalpha
- Revenue Growth: Sysco reported nearly $21 billion in total revenue for Q2, reflecting a 3% year-over-year increase, with local case volume in U.S. Foodservice up 1.2%, indicating strong performance across all business units, and projecting at least 2.5% local volume growth in Q3 and Q4, which will further enhance market share.
- Acquisition Expansion: The company completed the acquisition of Ginsberg's Foods, strengthening its presence in the Northeast, and is expected to enhance overall performance and market competitiveness through the integration of new business, especially amid ongoing macroeconomic challenges.
- Cash Flow Growth: Sysco's free cash flow increased by 25% year-to-date to $413 million, demonstrating high efficiency in financial management, which is expected to support future shareholder return plans, including $1 billion in dividends and $1 billion in share repurchases.
- Strategic Investments: Management emphasized continued investments in sales productivity tools and the expansion of value-tier offerings to address evolving customer demands, maintaining confidence in future growth despite external economic uncertainties.
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Analyst Views on SYY
Wall Street analysts forecast SYY stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for SYY is 87.56 USD with a low forecast of 80.00 USD and a high forecast of 98.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
10 Analyst Rating
5 Buy
5 Hold
0 Sell
Moderate Buy
Current: 83.510
Low
80.00
Averages
87.56
High
98.00
Current: 83.510
Low
80.00
Averages
87.56
High
98.00
About SYY
Sysco Corporation is engaged in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home. It also supplies a variety of non-food items. Its segments include U.S. Foodservice Operations, International Foodservice Operations, SYGMA and Other. U.S. Foodservice Operations segment includes United States Broadline operations and United States Specialty operations. International Foodservice Operations include operations outside of the United States. SYGMA segment includes its United States customized distribution operations serving quick-service chain restaurant customer locations. Other segment includes primarily its hotel supply operations, Guest Worldwide. It distributes various products, such as frozen foods, fresh meats and seafood, dairy products, beverage products, imported specialties, and fresh produce. It operates around 340 distribution facilities worldwide.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Sysco's Profit Margins Rise, Stock Surges
- Profit Growth: Sysco reported a 3% year-over-year sales increase to $20.8 billion for the quarter ending December 27, with gross profit rising 3.9% to $3.8 billion, demonstrating the company's ability to maintain profitability despite a 2.9% rise in product costs.
- Stock Surge: Following the announcement that full-year profits would come in near the top of its forecast, Sysco's stock price jumped over 10% on Tuesday, reflecting market optimism about its future growth prospects.
- Local Business Recovery: Sysco's U.S. foodservice segment saw a 1.2% increase in local case volumes, with CEO Kevin Hourican noting this marks the third consecutive quarter of growth, indicating the company's competitive strength despite declining restaurant traffic.
- Future Outlook: Management anticipates local case growth to reach at least 2.5% in the second half of the fiscal year, raising the full-year adjusted earnings per share forecast to between $4.50 and $4.60, which could represent up to 7% year-over-year growth.
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Sysco Reports Strong Q2 Earnings, Raises EPS Outlook
- Earnings Beat: Sysco reported adjusted earnings per share of 99 cents for Q2 FY2026, surpassing the analyst consensus estimate of 98 cents, indicating a robust earnings capacity.
- Steady Sales Growth: Quarterly sales reached $20.762 billion, closely aligning with the Street's expectation of $20.767 billion, marking a 3.0% year-over-year increase that reflects the company's stable market performance.
- Improving Local Case Growth: The company achieved its third consecutive quarter of local case growth, with USFS local case volume showing a positive 1.2% increase, highlighting its strong recovery in market demand.
- Optimistic Outlook: Despite facing a $100 million headwind from lower incentive compensation, Sysco raised its adjusted EPS outlook for FY2026 to the high end of its previous guidance range of $4.50-$4.60, demonstrating confidence in future performance.
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