Sysco Stock To $49?

Sysco (SYY) stock has fallen 15% during the past day, and is currently trading at $69.30. Our multi-factor assessment suggests that it may be time to sell SYY stock. We have, overall, a pessimistic view of the stock, and a price of $49 may not be out of reach. We believe there are several things to fear in SYY stock given its overall weak operating performance and financial condition. This isn’t appropriately reflected in the stock’s moderate valuation which is why we think it is unattractive.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $33 Bil in market cap, Sysco provides marketing and distribution of food products, including frozen, fresh, canned, and dairy foods, beverages, imported specialties, and non-food items like paper products and disposables.

[1] Valuation Looks Moderate

This table highlights how SYY is valued vs broader market. For more details see: SYY Valuation Ratios

[2] Growth Is Weak

• Sysco has seen its top line grow at an average rate of 4.0% over the last 3 years
• Its revenues have grown 2.6% from $81 Bil to $83 Bil in the last 12 months
• Also, its quarterly revenues grew 3.0% to $21 Bil in the most recent quarter from $20 Bil a year ago.

This table highlights how SYY is growing vs broader market. For more details see: SYY Revenue Comparison

[3] Profitability Appears Very Weak

• SYY last 12 month operating income was $3.1 Bil representing operating margin of 3.7%
• With cash flow margin of 3.2%, it generated nearly $2.6 Bil in operating cash flow over this period
• For the same period, SYY generated nearly $1.8 Bil in net income, suggesting net margin of about 2.2%

This table highlights how SYY profitability vs broader market. For more details see: SYY Operating Income Comparison

[4] Financial Stability Looks Moderate

• SYY Debt was $15 Bil at the end of the most recent quarter, while its current Market Cap is $33 Bil. This implies Debt-to-Equity Ratio of 45.0%
• SYY Cash (including cash equivalents) makes up $1.2 Bil of $27 Bil in total Assets. This yields a Cash-to-Assets Ratio of 4.5%

[5] Downturn Resilience Is Weak

SYY has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• SYY stock fell 30.1% from a high of $89.74 on 21 April 2022 to $62.69 on 12 October 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 12 February 2026
• Since then, the stock increased to a high of $91.16 on 1 March 2026 , and currently trades at $69.30

 
2020 Covid Pandemic

• SYY stock fell 63.5% from a high of $85.54 on 1 January 2020 to $31.24 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 7 May 2021

 
2008 Global Financial Crisis

• SYY stock fell 47.0% from a high of $36.72 on 24 January 2007 to $19.45 on 9 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 9 December 2013

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read SYY Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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