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Sysco Corporation Message Board

  • ccur60 ccur60 Nov 23, 2011 11:15 PM Flag


    Sysco (NYSE: SYY )
    Meanwhile, an even more egregious misuse of shareholder cash is ongoing at food-service provider Sysco, which last week announced a plan to buy back 20 million shares. That's $540 million worth at today's prices. Here we have a stock that costs nearly 14 times earnings but that most analysts fear will grow at barely half that rate over the next five years -- just 7.3%.

    Like Mosaic, Sysco is a weak cash producer. (Its $400 million in trailing free cash flow amounts to just 35% of the net income it claims to have earned.) Unlike Mosaic, Sysco is swimming in debt ($2.3 billion, net of cash) and in no position to be running around, wasting what little cash it has left. The stock's down 3% already this year, and I think it's going down even more.

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    • When was that article written? Back when they announced the repurchase in Nov.? Just because they announce a buyback doesn't mean they have to buy. It means they have the option to purchase if the market corrects. In other words it might be worth more to buy back stock rather than pay down debt in this low interest rate environment. Not a bad option to have plus they have historically increased dividends annually to shareholders.

    • VL gives a different picture of SYY than you do. It's earnings have improved in all but 2 years since 1995. It says that it's finances are A++ (as good as they get), and that their long term debts are covered by earnings 16.5 times - 4 times coverage is considered adequate. By most measures SYY could be consided to be a growth stock selling at a reasonable valuation-12.9/1 PE. This is another picture of SYY. The turnaround letter has it on his buy list up to 36 dollars a share.

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