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Sysco

NYSE:SYY
Snowflake Description

Established dividend payer with proven track record.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
SYY
NYSE
$28B
Market Cap
  1. Food and Staples Retailing
Company description

Sysco Corporation, through its subsidiaries, markets and distributes a range of food and related products primarily to the foodservice or food-away-from-home industry in the United States, Canada, Bahamas, Mexico, Costa Rica, Panama, the United Kingdom, France, Sweden, Ireland, Belgium, Spain, and Luxembourg. More info.


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3 Month History
SYY
Industry
5yr Volatility vs Market

Value

 Is Sysco undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Sysco to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

Current Discount
Amount off the current price Sysco is available for.
Intrinsic value
10%
Share price is $54.65 vs Future cash flow value of $60.58
Current Discount Checks
For Sysco to be considered undervalued it must be available for at least 20% below the current price. Less than 40% is even better.
  • Sysco's share price is below the future cash flow value, but not at a moderate discount (< 20%).
  • Sysco's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Sysco's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Sysco's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Sysco is overvalued based on earnings compared to the US Food and Staples Retailing industry average.
  • Sysco is overvalued based on earnings compared to the US market.
Price based on expected Growth
Does Sysco's expected growth come at a high price?
  • Sysco is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on Sysco's assets?
  • Sysco is overvalued based on assets compared to the US Food and Staples Retailing industry average.
X
Value checks
We assess Sysco's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Food and Staples Retailing industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Food and Staples Retailing industry average (and greater than 0)? (1 check)
  5. Sysco has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (23.41%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for Sysco is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$7,257

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $2,148 × (1 + 2.47%) ÷ (8.49% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$36,543

Present value of terminal value:
$24,309

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$31,566 = $7,257 + $24,309

Value = Total value / Shares Outstanding ($31,566 / 521)

Discount to Share Price

Value per share:
$60.58

Current discount (share price of $54.65): 9.79%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 8.49% = 2.47% + (0.8 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($28,475,727,888).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.677 = 0.554 (1 + (1- 30%) (31.56%))

Levered Beta used in calculation = 0.8



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.53%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is Sysco expected to perform in the next 1 to 3 years based on estimates from 14 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
5.7%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Sysco expected to grow at an attractive rate?
  • Sysco's earnings growth is expected to exceed the low risk savings rate of 3.6%.
Growth vs Market Checks
  • Sysco's earnings growth is positive but not above the US market average.
  • Sysco's revenue growth is positive but not above the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • Sysco's earnings are expected to grow by 5.7% yearly, however this is not considered high growth (20% yearly).
  • Sysco's revenue is expected to grow by 3.8% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • Sysco is expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be above 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be above the current US Food and Staples Retailing industry average.
  • An improvement in Sysco's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess Sysco's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Sysco has a total score of 2/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has Sysco performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Sysco's growth in the last year to its industry (Food and Staples Retailing).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Sysco's year on year growth rate is negative over the past 5 years, however the most recent earnings are above average.
  • Sysco's 1 year earnings growth exceeds its 5 year annual average (15.4% vs -3.1%)
  • Sysco's earnings growth has exceeded the US Food and Staples Retailing industry average in the past year (15.4% vs -1.4%).
Earnings and Revenue History
Sysco's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Strong return on shareholders funds (ROE > 20%) last year.
  • Sysco performed above the US Food and Staples Retailing industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has been diminishing over 3 years.
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Past performance checks
We assess Sysco's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Food and Staples Retailing industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Sysco has a total score of 4/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Sysco's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Sysco's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Sysco is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Sysco's long term commitments exceed its cash and other short term assets.
Balance sheet
This treemap shows a more detailed breakdown of Sysco's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • High level of stock/ inventory/ unsold assets.
  • Total debt is covered by total short term assets, assets are 1x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • Sysco's level of debt (387.7% of total debt) compared to net worth is high (greater than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (61.7% vs 387.7% today).
  • Total debt is well covered by annual operating cash flow (22.3%, greater than 20% of total debt).
  • Interest on debt is well covered by earnings (EBIT is 7.3x coverage).
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Financial health checks
We assess Sysco's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. Sysco has a total score of 3/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Sysco's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
2.64%
Current annual income from Sysco dividends. Estimated to be 2.61% next year.
If you bought $2,000 of Sysco shares you are expected to receive $1 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Paying above low risk savings rate (2.25%).
  • Paying below markets top dividend payers (3.18%).
Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Dividends per share have been stable in the past 10 years.
  • Dividends per share have increased over the past 10 years.
Current Payout to shareholders
What portion of Sysco's earnings are paid to the shareholders as a dividend.
  • Dividends paid are covered by net profit (1.7x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be well covered by net profit (2.3x coverage).
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Income/ dividend checks
We assess Sysco's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can Sysco afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. Sysco has a total score of 5/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Sysco's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Bill DeLaney, image provided by Google.
Bill DeLaney
COMPENSATION $15,100,280
AGE 61
TENURE AS CEO 8.7 years
CEO Bio

Mr. William J. DeLaney, III, also known as Bill, serves as the Chief Executive Officer at Sysco Corporation since March 27, 2009. He serves as a Director of Express Scripts, Inc. He served as President at Sysco Corporation since March 2010. Mr. DeLaney served as the Chief Financial Officer and Executive Vice President at Sysco Corporation from July 1, 2007 to October 2009. He served as Senior Vice President of Financial Reporting of Sysco Corporation since January 7, 2007. He served as the President and Chief Executive Officer of SYSCO Charlotte, LLC since 2002. He served as an Executive Vice President of the Syracuse operation. He served as a Treasurer at SYSCO and Vice President from 1993 to 1994. Mr. Delaney served as a Chief Financial Officer and Senior Vice President since 1998. He served as an Independent Director of Aristotle Holding, Inc., since September 2011. He serves as a Director of The Center for Houston's Future and the Greater Houston Partnership. He has been an Independent Director of Express Scripts Holding Company since September 28, 2011 and Sysco Corporation since January 2009. Mr. DeLaney holds a Master of Business Administration from the Wharton Graduate Division of the University of Pennsylvania in 1982 and Bachelor of Business Administration from the University of Notre Dame, located in South Bend, Ind., in 1977.

CEO Compensation
  • Bill's compensation has been consistent with company performance over the past year.
  • Bill's compensation is higher than average for a company of this size and profit level.
Management Team Tenure

Average tenure and age of the Sysco management team in years:

3.2
Average Tenure
51.6
Average Age
  • The tenure for the Sysco management team is about average.
Management Team

Bill DeLaney

TITLE
CEO & Director
COMPENSATION
$15M
AGE
61
TENURE
8.7 yrs

Tom Bené

TITLE
President & COO
COMPENSATION
$6M
AGE
55
TENURE
1.8 yrs

Joel Grade

TITLE
Executive VP & CFO
COMPENSATION
$4M
AGE
46
TENURE
2.2 yrs

Wayne Shurts

TITLE
Executive VP & CTO
COMPENSATION
$4M
AGE
58
TENURE
5.1 yrs

Russell Libby

TITLE
Executive VP of Administration & Corporate Secretary
COMPENSATION
$4M
AGE
51
TENURE
2.3 yrs

Anita Zielinski

TITLE
Senior VP & Chief Accounting Officer
AGE
44
TENURE
0.6 yrs

Neil Russell

TITLE
Vice President of Investor Relations
AGE
46

Adam Skorecki

TITLE
Senior Vice President
TENURE
3.6 yrs

Jose Colondres

TITLE
Vice President of Compliance
TENURE
1.9 yrs

Nehl Horton

TITLE
Chief Communications & Government Relations Officer and Senior Vice President
TENURE
3.1 yrs
Board of Directors Tenure

Average tenure and age of the Sysco board of directors in years:

7.5
Average Tenure
66.5
Average Age
  • The tenure for the Sysco board of directors is about average.
Board of Directors

Jackie Ward

TITLE
Non-Executive Chairman
COMPENSATION
$770K
AGE
79
TENURE
4 yrs

Bill DeLaney

TITLE
CEO & Director
COMPENSATION
$15M
AGE
61
TENURE
8.8 yrs

Richard Tilghman

TITLE
Independent Director
COMPENSATION
$310K
AGE
77
TENURE
15 yrs

John Cassaday

TITLE
Independent Director
COMPENSATION
$305K
AGE
63
TENURE
13 yrs

Larry Glasscock

TITLE
Independent Director
COMPENSATION
$305K
AGE
69
TENURE
7.2 yrs

Nancy Newcomb

TITLE
Independent Director
COMPENSATION
$285K
AGE
72
TENURE
11.8 yrs

Hans-Joachim Koerber

TITLE
Independent Director
COMPENSATION
$285K
AGE
71
TENURE
9.8 yrs

Josh Frank

TITLE
Independent Director
COMPENSATION
$285K
AGE
38
TENURE
2.3 yrs

Nelson Peltz

TITLE
Independent Director
COMPENSATION
$285K
AGE
74
TENURE
2.3 yrs

Dan Brutto

TITLE
Independent Director
COMPENSATION
$285K
AGE
61
TENURE
1.2 yrs
Recent Insider Trading
  • Sysco insiders have only sold shares in the past 3 months.
Who owns this company?
X
Management checks
We assess Sysco's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Sysco has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Map
Description

Sysco Corporation, through its subsidiaries, markets and distributes a range of food and related products primarily to the foodservice or food-away-from-home industry in the United States, Canada, Bahamas, Mexico, Costa Rica, Panama, the United Kingdom, France, Sweden, Ireland, Belgium, Spain, and Luxembourg. It operates through three segments: U.S. Foodservice Operations, International Foodservice Operations, and SYGMA. The company distributes a line of frozen foods, such as meats, seafood, fully prepared entrees, fruits, vegetables, and desserts; a line of canned and dry foods; fresh meats and seafood; dairy products; beverage products; imported specialties; and fresh produce. It also supplies various non-food items, including paper products comprising disposable napkins, plates, and cups; tableware consisting of China and silverware; cookware, which include pots, pans, and utensils; restaurant and kitchen equipment and supplies; and cleaning supplies. The company serves restaurants, hospitals and nursing homes, schools and colleges, hotels and motels, industrial caterers, and other foodservice venues through 324 distribution facilities. Sysco Corporation was founded in 1969 and is headquartered in Houston, Texas.

Details
Name: Sysco Corporation
Ticker: SYY
Exchange: NYSE
Founded: 1969
Market Cap: $28,475,727,888
Shares outstanding: 521,056,320
Website: http://www.sysco.com
Address: Sysco Corporation
1390 Enclave Parkway,
Houston,
Texas, 77077,
United States
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NYSE SYY Common Stock New York Stock Exchange US USD 26. Feb 1971
DB SYY Common Stock Deutsche Boerse AG DE EUR 26. Feb 1971
BMV SYY * Common Stock Bolsa Mexicana de Valores MX MXN 26. Feb 1971
Number of employees
Current staff
Staff numbers
66,500
Sysco employees.
Industry
Industry: Food Distributors
Sector: Food and Staples Retailing