SYY Stock Study (5-22-26)

Posted by Mark on May 28, 2026 at 06:54 | Last modified: May 22, 2026 09:38

I recently did a stock study on Sysco Corp. (SYY, $77.00).

M* writes:

     > Sysco is the largest US foodservice distributor with 18% share of the
     > highly fragmented $377 billion domestic market. It distributes roughly
     > 500,000 food and nonfood products to restaurants (60% of fiscal 2025
     > revenue), education and government buildings (8%), healthcare
     > facilities (8%), travel and leisure (7%), and other locations (17%)
     > where individuals consume away-from-home meals. In fiscal 2025,
     > 70% of the firm’s revenue was derived from its US foodservice
     > operations, while its international (18%), quick-service
     > logistics (10%), and other (2%) segments contributed the rest.

Over the past decade, this mega-size ( > $50B annual revenue) company grows sales and EPS at annualized rates of 5.3% and 7.9%, respectively (fiscal year ends Jun 30). The COVID-19 pandemic was particularly rough for restaurants and their suppliers so I am excluding 2020 and 2021 from the full analysis. Lines are then mostly up, straight, and parallel except for EPS dips in ’22 (vs. ’19) and ’25 (YOY). Five- (10-) year earnings R^2 is 0.73 (0.75) and Value Line (VL) gives an Earnings Predictability score of 40. Shares outstanding decrease 15.2% (1.8%/year).

Over the past decade, PTPM leads peer and industry averages while ranging from 2.5% in ’22 to 3.3% (three times) with a last-5-year mean of 2.95%. ROE leads peer and industry averages while increasing from 23.3% to 92.7% (’25) with a last-5-year mean of 86.9% (shareholder equity decreases 47% due to aggressive share buyback programs, 54 consecutive years of increases as a Dividend Aristocrat, and—looking forward—the Jetro Restaurant Depot acquisition for $29B). Debt-to-Capital is greater than peer and industry averages while increasing from 68.1% to 88.8% (’25) with a last-5-year mean of 87.7%.

Quick Ratio is 0.76 and Interest Coverage 4.4 per M* who assigns “Wide” Economic Moat, “Exemplary” rating for Capital Allocation, and a B grade for Financial Health (per BetterInvesting® website). VL gives B++ grade for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 3.7% and 4.9% for ’26 and ’27 (based on 14 analysts).
• Zacks gives YOY ACE 3.7% and 4.6% for ’26 and ’27, respectively (6 analysts).
• VL projects 4.2% per year from ’25-’30.
• CFRA projects 3.7% YOY and 4.4% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 4.0% per year and projects 5-year CAGR of 4.4% in Equity Report.

My 3.0% annualized forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 7.3% and 8.0% per year for ’25-’27 and ’25-’28, respectively (based on 20 analysts).
• Nasdaq.com gives ACE 6.0% and 6.6% per year for ’26-’28 and ’26-’29 [7 / 4 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year CAGR of 4.5%.
• Finviz gives 5-year annualized ACE of 6.0% (4).
• Argus projects 5-year CAGR of 7.0%.
• LSEG projects LTG of 5.0%.
• YF gives YOY ACE 2.8% and 8.0% for ’26 and ’27, respectively (16).
• Zacks gives YOY ACE 2.9% and 8.3% for ’26 and ’27, respectively, and 5-year CAGR of 5.3% (7).
• VL projects 7.2% annualized from ’25-’30.
• CFRA projects 3.8% YOY and 6.2% per year for ’26 and ’25-’27 along with 3-year CAGR of 5.0%.
• M* gives long-term ACE of 10.6% per year and projects 5-year CAGR of 5.8% in Equity Report.

My 4.0% forecast is below the long-term-estimate range (mean of eight: 6.4%). Initial value is 2026 Q3 EPS of $3.61/share (TTM) rather than ’25 EPS of $3.73.

My Forecast High P/E is 21.0. Over the past 10 years (recall ’20 and ’21 excluded throughout), high P/E decreases from 30.9 to 22.0 (’25) with a last-5-year mean of 25.9 and last-5-year-mean average P/E of 22.9. I am below the range.

My Forecast Low P/E is 16.0. Over the past 10 years, low P/E decreases from 21.6 to 18.0 (’25) with a last-5-year mean of 20.0. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $57.80 is default based on initial value from above: 24.9% less than previous close and 15.2% less than 52-week low.

Over the past 10 years, Payout Ratio (PR) ranges from 47.8% in ’19 to 75.0% in ’16 with a last-5-year mean of 59.0%. I am forecasting the latter.

These inputs land SYY in the HOLD zone with a U/D ratio of 0.8. Total Annualized Return (TAR) is 6.5%.

PAR (using Forecast Average—not High—P/E) of 4.3% is less than I seek for a mega-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR but even that falls short of my target.

To assess MOS, I start by comparing my inputs with Member Sentiment (MS). Based on 33 studies done in the past 90 days (14 outliers including mine excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 4.0%, 7.7%, 24.5, 18.0, and 82.9% respectively. I am lower across the board. VL projects a future average P/E of 19.0 that is less than MS (21.3) and greater than mine (18.5).

MS high / low EPS are $5.35 / $3.65 versus my $4.39 / $3.61 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $6.30 ($5.92) is greater than both.

MS LSPF of $62.20 implies a Forecast Low P/E of 17.0: less than the above-stated 18.0. MS LSPF is 5.3% less than the default $3.65/share * 18.0 = $65.70 resulting in more conservative zoning. MS LSPF exceeds mine by 7.6%, however.

MOS is robust in the study because my inputs (excepting PR, which I’m leaving at the 5-year mean) are near or less than historical/analyst/MS averages/ranges. Also supportive of the MOS is MS TAR exceeding mine by 9.1% per year (too much).

With regard to valuation, PEG is 3.1 and 5.1 per Zacks and my projected P/E, respectively: significantly overvalued (M* perplexingly has 0.4). Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 0.93. “Quick and Dirty” DCF method has stock undervalued by 34% and M* reports stock at an 8% discount.

Despite this extremely conservative study, I personally need the stock to revisit 52-week lows before getting seriously interested. It’s not a high-quality growth stock and the company is saddled with high debt. The two may go hand in hand because while I don’t really believe the debt will become unmanageable, it may hinder growth prospects.

Per U/D, SYY is a BUY under $66/share. BetterInvesting® TAR criterion is met [96.6 / ((12.07 / 100 ) +1 ) ^ 5] ~ $54.50 given a forecast high price ~$97.

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