Sysco Corporation (NYSE:SYY)

CAPS Rating: 5 out of 5

The Company through its subsidiaries and divisions distributes food and related products to restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers.

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Member Avatar FrankoJames (93.68) Submitted: 12/14/2014 1:24:29 AM : Outperform Start Price: $40.00 SYY Score: +2.13

The food of kings.

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Member Avatar benyboy (< 20) Submitted: 9/10/2014 10:47:38 PM : Outperform Start Price: $37.95 SYY Score: +3.51

cramer buy below 36

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Member Avatar FloydParks (68.12) Submitted: 8/16/2014 5:56:58 PM : Outperform Start Price: $37.26 SYY Score: +4.21

Dividends will become increasingly valued in the next few years

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Member Avatar cherylsmess (49.95) Submitted: 7/17/2014 1:00:35 AM : Outperform Start Price: $36.62 SYY Score: +6.43

solid company that has more growth ahead and little competition.

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Member Avatar afewgoodstocks11 (24.23) Submitted: 7/15/2014 1:24:23 PM : Outperform Start Price: $32.62 SYY Score: -3.77

Div. (Yield) $1.16 (3.1%)

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Member Avatar pchop123 (80.38) Submitted: 4/1/2014 7:17:54 PM : Outperform Start Price: $35.21 SYY Score: +5.95

solid play

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Member Avatar BEACHDOGS (45.79) Submitted: 1/30/2014 7:25:32 PM : Outperform Start Price: $34.09 SYY Score: +2.61

Just watch the road and you will see all of the trucks with this
name on their sides. They are very busy.

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Member Avatar ladylucre (27.64) Submitted: 10/30/2013 12:34:58 PM : Outperform Start Price: $31.65 SYY Score: +11.71

Food service for many.....now, military

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Member Avatar TMF1000 (99.71) Submitted: 10/1/2013 1:28:29 PM : Outperform Start Price: $18.78 SYY Score: -17.20

I placed SYY on Caps 5/15/2009 at a price of $19.55 including dividends. They have underperformed the S&P500. But I have confidence in them that they will reclaim their past glory.

Restaurant sales in 2012 grew 1.1%, but food sales were up only 0.7%. Worse the increase was mostly due to price increases. Food unit sales were down 0.3%. We are often thinking in terms of successful restaurants such as CMG and BWLD, but what we have to remember is that SYY serves a large number of restaurants including many smaller restaurants that may not be doing quite as well as the most successful national chains. Even though the economy is doing better, higher gas prices are once again taking some of the money out of consumers’ pockets. It is also hurting diesel prices and that hurts Sysco margins.

Restaurants operate in a competitive environment and when things are going well, it is hard for them to raise prices. SYY has kept their prices in check so to limit pressure on their customers. This has been going on since the last time I wrote about them two years ago.

Sysco partnership with Good Natural Family Farms, a cooperative of 150 farms in Missouri is one example of how they plan on capitalizing on the trend toward healthier eating. Every spring they take customers to these farms to showcase what they grow. This is just one example. People want to go out and eat less meat and more fruit and vegetables. This can be a good thing for Sysco since produce has better margins than proteins. Restaurants that lowered the calorie count of their menu saw increased traffic at their restaurants.

No one in the industry has a more diverse product line. Their economies of scale give them a large competitive advantage. A wide diversity of customers and geographies served help insulate them from regional economic weakness. They are the only food service distributor that is publicly owned which saddles them with some regulatory expenses. But the stock market has given them a source of funds in 2013. I think that trumps those expenses. They have made good use of that this year.

The foodservice distribution industry is a very mature. Revenue growth isn’t expected to grow more than a few percent a year. However, individual companies can gain market shares and increase revenue growth through acquisitions, so we expect SYY to grow at a rate higher than the industry average. And I believe SYY is taking market share from competitors. Margins are low in the industry and moving lower thanks to the increase in competition from non-traditional distribution companies such as club stores and purchasing organizations and commercial wholesale outlets.

Diesel prices affect them. Diesel prices moved up 2% in 2013, but moved up 14% in 2012. Hopefully additional drilling in the U.S. will ease prices.

The company generated $1.02 billion in cash flow or $1.71 per share up from 59.8% over last year. This gives them a cash flow yield of 5.5%. This isn’t bad, but they do have expenses, some of those expenses are in their control.

In fiscal 2013, they paid out $648.254 million in dividends. They now pay an annual dividend of $1.12 that gives them a dividend yield of 3.6%. We want to keep that. They also paid out $721.616 in stock repurchases – we can do without so much of that. I prefer them to lower debt and if debt isn’t due, then use only available cash flow to buy back shares after acquisitions.

They acquired $397.447 million for acquisitions. Adding that to dividend payments, they paid out 1.046 billion and that exceeded cash flow. They are able to borrow money so they continue to do repurchase shares, pay out a dividend, and acquire more companies. But I would be happier if they tried to live within their means. Interest on their debt is low and maturity is staggered over 13 years. Even so, I would like to see them concentrate on dividends and acquisitions and allow the shares outstanding to increase. I would like to see them build a cash cushion.

I own the company and plan on holding them. I placed them on Caps on 5/15/2009 and they have underperformed the S&P500. I definitely don’t like that because it means they also underperformed in my portfolio since that time. But I have confidence that over the long-term they will leverage their vast infrastructure, cut costs, continue to take market share and in time resume business growth and dividend growth.

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Member Avatar Teacherman333 (85.36) Submitted: 6/16/2013 11:16:08 AM : Outperform Start Price: $32.60 SYY Score: -1.80

For reference point and to allow for comments by others. As of the end of March, 2013.

ROE 20.31
Trailing PE 20.04
PB 3.98
Div yield 3.20%

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Member Avatar prstout (61.84) Submitted: 1/10/2013 3:36:37 PM : Outperform Start Price: $29.10 SYY Score: -1.00

Attractive dividend yield at nearly 4%.

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Member Avatar squirehay (< 20) Submitted: 12/11/2012 7:52:30 PM : Outperform Start Price: $29.92 SYY Score: -7.53

Great company with a growing dividend.

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Member Avatar stationfool (30.93) Submitted: 12/6/2012 11:37:20 AM : Outperform Start Price: $29.82 SYY Score: -9.20

divedend

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Member Avatar valuemoneygreen (80.83) Submitted: 11/25/2012 3:03:38 PM : Outperform Start Price: $28.41 SYY Score: -0.11

AMERICA'S FOOD DISTRIBUTION TITAN! Why do I like Sysco so much? Well 1st off it supplies about 400,000 customers and has a market cap over 17 billion. So it is big and seemingly not too risky. Sysco is the LARGEST food-service distributor in North America (market leaders are who I like best!), with 17% share of the market. Next closest competitor you ask? U.S. Foodservice with only 9% and then Performance Food Group with just 5% . Sysco has realized returns that are about 3 times the level of its peers.
*ROE 5year average? 29
*ROC 5 year average? 15.5

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Member Avatar Keithrieg (< 20) Submitted: 7/8/2012 12:15:02 AM : Outperform Start Price: $26.93 SYY Score: -1.58

they have a great business plan.

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Member Avatar MaxTheTerrible (87.65) Submitted: 5/7/2012 11:03:01 AM : Outperform Start Price: $25.50 SYY Score: -19.55

Initiated ~5% position in RL portfolio @27.42 today. Plan to hold "forever".

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Member Avatar jfrankh57 (34.17) Submitted: 3/3/2012 2:24:31 AM : Outperform Start Price: $26.65 SYY Score: +1.94

Solid product, good earnings can only get better as economy recovers. Decent dividend payout that isn't breaking the bank and an economic recovery will strengthen cash flow to continue support for the dividend.

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Member Avatar JohnnyEvers14 (37.38) Submitted: 2/18/2012 9:28:29 PM : Outperform Start Price: $26.91 SYY Score: +0.08

Great niche, they know what they're doing.

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Member Avatar finmasterflex784 (< 20) Submitted: 2/6/2012 3:43:17 PM : Outperform Start Price: $27.05 SYY Score: -3.36

a safe, boring stock

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Member Avatar gulfsailor (< 20) Submitted: 12/15/2011 12:36:22 PM : Underperform Start Price: $26.19 SYY Score: +13.06

Have been a holder and it did not do well.

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