On 29 December 2018, Sysco Corporation (NYSE:SYY) released its earnings update. Generally, analysts seem cautiously optimistic, with profits predicted to increase by 19% next year compared with the past 5-year average growth rate of 12%. By 2020, we can expect Sysco’s bottom line to reach US$1.7b, a jump from the current trailing-twelve-month of US$1.4b. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Can we expect Sysco to keep growing?
The 14 analysts covering SYY view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of SYY’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$1.4b and the final forecast of US$2.0b by 2022, the annual rate of growth for SYY’s earnings is 9.2%. This leads to an EPS of $4.21 in the final year of projections relative to the current EPS of $2.74. With a current profit margin of 2.4%, this movement will result in a margin of 3.1% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Sysco, there are three relevant aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Sysco worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Sysco is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sysco? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.