SYSCO Corp (SYY)

The distribution business is all about size and scale. Sysco is the undisputed top dog in the industry. The company is investing in things that make it more efficient (i.e. better software, new warehouses, and trucks). This move will allow the company to defend margins. The firm's nearest rival (U.S. Foodservices) cannot afford to make these moves because it was taken out in an LBO and must use every extra penny to repay debt. Even in a protracted downturn this company should be better insulated that its rivals since restaurants only compose 60% of the company's revenues. The rest of the sales come from customers with more reliable demand picture. This environment should allow the company to make some tuck-in acquisitions. Sysco should have little trouble financing a deal since it has repeatedly accessed the capital markets at attractive rate during the past 2 years.

SYY is a dependable cash-generator. Earnings artificially depressed due to construction of new distribution facilities. Dropped lately due to the acquisition of food services of Bunn Capital. Ready to spring back.

SYY is one of the 319 Mergent Dividend Achievers, meaning they have a long track record of annual dividend hikes. If I did the math correctly, the last 10-years' dividend hikes have all been double digit increases. Fundamentals are reasonable; forward PE a little under 15, PEG of 1.26, and dividend yield of 3% with a 45% payout ratio.

SYY reported fiscal third quarter earnings of 0.40 a share on 28 April, beating estimates by a penny. Revenue was up over the year ago quarter, but slightly below estimates. The market apparently liked the news and took the stock price up nearly 8.5% and it's now pulled back to near the pre-earnings price.

I scanned through the earnings transcript at Seeking Alpha and didn't see anything earth shattering. Just solid execution and a company on track to keep growing revenues in the high single digits and earnings in the low double digits

For those following inflation, the COO, Ken Spitler, had this comment "Food inflation as measured by our internal measure of product cost inflation remained high, averaging about 6.2% for the quarter." Quote taken from Seeking Alpha's transcript.

This is a stock that I own. I initially bought it in 1977. A large portfolio I came to manage owned well over five percent of the company in 1978.

This is a high-quality, I might even say dominant, Food Distribution company.

Fairly defensive as the US. Economy enters a period of slower growth before the next Recession that is surely out there in 2008, 2009, or beyond. Sysco is a core, defensive, stable growth company to buy and hold, if not forever, certainly over the three decades I have owned it.

If there were ever a Buy and Hold forever company Sysco(SYY) is it. - BOOYAH

Kahuna,CFA

Margins will continue to be squeezed due to high gas costs and lower sales to restaurants. I think it is a long term buy and DRIP and will outperform in time, just not the next little while. It just depends on your time horizon and goals. I'll be buying on dips and bad sentiment.

Delivers all those little things restaurants, colleges, and hospitals need to keep running, like napkins, plates, cups, etc. Even handles food. Has a very long and successful history of growth by acquisition. Slowly acquiring and consolidating the fragmented industry. However, Berkeshire bought a major competitor, US Foodservices, which says something for the competition. Still, this one has been a long term winner and will likely remain so.

Marty Whitman says not to pay up for a growth company -
SYY (*the other Sysco) I feel would qualify as an example of growth on the cheap. At first glance it seems moderately priced for moderate growth.

However - a big thing happened within the past quarter. They are unifying their many divisions (around 80 or so that have been separate) into 1 for purchasing power. This should allow them to increase margins - and possibly leading to a multiple expansion.

The company has a very high ROE% - a massive revenue base that is growing steadily - and a very strong brand moat.

Good management and company history of success. $20 Billion market cap.

After the bell the just announced a stock repurchase program for around $650 Million (20 million shares)
1.8 Million shares are still left over from the previous buyback plan.
Thats 21.8 Million in shares to be bought.

"We consider our share repurchase program an important part of our investments," said Richard J. Schnieders, chairman and chief executive officer of SYSCO (NYSE: SYY - News). "For the last 15 years, we have been able to return a total of approximately $8.2 billion to shareholders, consisting of approximately $5.2 billion in share repurchases and approximately $2.9 billion in dividend payouts."

I bet this shows up in some Guru portfolios very soon....

Largest supplier to an ever growing industry. Able to benefit from technology and logistic efficiencies.

is the best supplier of foods to restaurants

no where in the pro's and con's has anyone discussed cost containment. to keep their performance to date with the cost of fuel increase appears to speak well of the ability to manage - a plus.

Food wholesaler to restaurants, caterer, hotels with food stuffs and utensils is about to venture into international markets starting Hong Kong. 2.3% diviend will support its holding a few year to reap the int'l expansion to full bloom.

80 companies inside the SYY "wrapper" are now unifying to purchase orders for the first time.
This will allow them to increase margins and grow the bottom line. This should be almost immediate.

There is a strong possibility that SYY will also have a multiple expansion because of this increase in operating margins.

SYY could be considered a growth story at a value price before this move to get lower prices from suppliers.

The perfect storm.

It seems that a big part of Sysco's client base is restaurants. I don't see that industry as being a great investment in the near future. I think Sysco will be challenged with rising food prices and possibly restaurants with declining comps.

Additionally, I don't see Sysco as having been a great investment to begin with. Over the past five years, capital appreciation is essentially non-existent. According to my Yahoo price chart, the stock price was just a notch above $30 five years ago. Today it sits at about $33. Pathetic. I suppose the somewhat meager dividend is the only redeeming feature.

Personally, I think I would be better off with T-bills than Sysco.

With Ahold divesting US Foodservice, this can do nothing but help Sysco. The confusion of the change in ownership and leadership will slow growth and create more obstacles to growth.

Don't sell Sysco short, they could be in the hunt for US Foodservice and take over #2 in the industry. There would be lots of real estate to sell, but the corporate staff is in place.

SYY has performed reasonably well in a difficult environment. The company generates significant cash from operations and continues to invest in its infrastructure, which should generate continuing cost savings in the long term. This year, the company has generated solid top line growth, while EPS have been somewhat pressured by higher oil prices. Given the recent decline in oil prices as well as continuing execution by management, I believe investors will recognize the strength of SYY's business. Thus, while I like the stock for the long-term, I believe there is an opportunity for near-term (within 1 year) appreciation.

Growing organically and through acquistion; well run dividend payer. ...may experience weakness in the next economic downturn, but will recover nicely. Best in their field

Fabas indulcet fames - Hunger sweetens the beans!
These are the folks that deliver stuff to restaurants and food service establishments. It is not a very complicated business, but they do it very well. The down economy hits restaurants hard, but this company will be around for the long haul. Restaurants go out of business frequently, so SYY watches the extension of credit carefully. When a restaurant goes under, it is usually replaced by a new restaurant. Alas, a new customer for linens, napkins, and salt shakers.

My "liittle" (he's 6" taller) brother is an executive chef at a very classy restaurant. He loves the work, he loves the creativity, and he loves that he isn't dependent on sysco. Every other restaurant he's worked at, every chain, pretty much everywhere that gives people food for money....all use sysco.

At a time (the late 1990s) when tech stocks were on top of the world, and it seemed like everyone had heard of the big companies, I worked for cisco. When people asked me who I worked for, and I said 'cisco', most of them would follow up the original question with 'Oh, do you drive truck for them?". The sysco trucks are ubiquitious.

When people are in good times, they like to go out and eat.

When people are in bad times, they don't want to cook - so they order out, or go out to eat.

Sysco benefits.

Allot of cappers here in the red but this looks like a real bargain to me too. This looks well overdue for a nice breakout. 314 AllStar Green thumbs to 3 reds. Earnings have fallen much less than the price of the stock. Why is this trading just $1 above the March lows?