Investors in Sysco Corporation (NYSE:SYY) had a good week, as its shares rose 10.0% to close at US$60.83 following the release of its first-quarter results. Revenues of US$12b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of US$0.42 an impressive 85% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Sysco's ten analysts are now forecasting revenues of US$51.3b in 2021. This would be a reasonable 3.9% improvement in sales compared to the last 12 months. Sysco is also expected to turn profitable, with statutory earnings of US$1.99 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$51.6b and earnings per share (EPS) of US$1.47 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the considerable lift to earnings per share expectations following these results.
The consensus price target was unchanged at US$67.10, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Sysco, with the most bullish analyst valuing it at US$80.00 and the most bearish at US$56.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Sysco's growth to accelerate, with the forecast 3.9% growth ranking favourably alongside historical growth of 3.0% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 3.3% per year. Sysco is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Sysco's earnings potential next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Sysco analysts - going out to 2025, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Sysco (of which 1 doesn't sit too well with us!) you should know about.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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