Sysco Corp (SYY, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $81.65, Sysco Corp has witnessed a daily loss of 0.15%, marked against a three-month change of 4.23%. A thorough analysis, underlined by the GF Score, suggests that Sysco Corp is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 6/10
- Profitability rank: 9/10
- Growth rank: 9/10
- GF Value rank: 9/10
- Momentum rank: 7/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. GuruFocus assigned Sysco Corp the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Sysco Corp Business
Sysco Corp is the largest U.S. foodservice distributor with a 17% share of the highly fragmented $370 billion domestic market. It distributes roughly 500,000 food and nonfood products to various sectors, including restaurants, education, government buildings, travel, leisure, and healthcare facilities. In fiscal 2024, 70% of the firm's revenue was derived from its U.S. foodservice operations, while its international, quick-service logistics, and other segments contributed the rest. With a market cap of $40.1 billion and sales of $79.7 billion, Sysco Corp's operating margin stands at 4.02%.
Financial Strength Breakdown
According to the Financial Strength rating, Sysco Corp's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Sysco Corp stands impressively at 5.07, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 5.3, Sysco Corp exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.17, Sysco Corp's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Sysco Corp's impressive standing among its peers in generating profit. Sysco Corp's Operating Margin has increased (4.77%) over the past five years, as shown by the following data: 2020: 1.42; 2021: 2.82; 2022: 3.42; 2023: 3.98; 2024: 4.06. Sysco Corp's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Sysco Corp demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 16.2%, which outperforms better than 78.86% of 298 companies in the Retail - Defensive industry. Moreover, Sysco Corp has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 22.5, and the rate over the past five years is 13.7. This trend accentuates the company's continued capability to drive growth.
Conclusion
Sysco Corp's financial strength, profitability, and growth metrics, as highlighted by the GF Score, underscore the firm's unparalleled position for potential outperformance. With a strong market presence and strategic financial management, Sysco Corp is poised to continue its trajectory of growth and market leadership. For investors seeking companies with strong GF Scores, GuruFocus Premium members can explore more opportunities using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
