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Sysco Corporation Message Board

  • analyst112 analyst112 Aug 12, 2013 1:11 PM Flag

    Restaurant Depot is killing them

    Cash and carry locations taking all growth and depressing margins. Sysco cannot grow and will suffer margin pressure---get out. Several DIY pick up companies.

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    • That 20% ROE will be 10% and earnings will be 50% lower.

      Sentiment: Strong Sell

      • 1 Reply to analyst112
      • Our Recommendation

        Sysco believes in growing through acquisitions since the company operates in a highly fragmented industry. It intends to achieve sales growth of 0.5% to 1% through acquisitions in the long term. The acquisition environment is currently favorable and the company has a number of acquisitions at various stages of processing at the moment. To date in fiscal year 2013, the company has already acquired a total of 9 companies, whose aggregate annual revenues is over $750 million.

        We appreciate the company’s strategy of growth through acquisitions and its efforts to reduce costs and improve efficiency. However, we are concerned about rising costs due to fuel price hikes and other inputs, which hurt margins.

        Sysco holds a Zacks Rank #4 (Sell). However, there are other stocks in the retail and wholesale sector that are worth considering. These include Green Mountain Coffee Roasters Inc (GMCR - Analyst Report), Nash Finch Co (NAFC - Analyst Report) and United Natural Foods Inc (UNFI - Analyst Report). While Green Mountain and Nash Finch carry a Zacks Rank #1 (Strong Buy), United Natural holds a Zacks Rank #2 (Buy).

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