Shares of Sysco Corp (SYY) – a global food products maker and distributor - recently hit a 52-week high of $33.37 on Mar 8, on the back of a strong second quarter of fiscal 2013, results of which were announced on Feb 4. The company beat its previous 52-week high of $32.68 attained on Feb 20, and has generated a return of approximately 4.3% since Dec 31, 2012.
The company’s long-term estimated EPS growth rate is 7.47%. Average volume of shares traded over the last three months came in at approximately 3,401K.
An impressive earnings surprise history, the company’s strategy to grow through acquisitions and its efforts to reduce costs and improve efficiency drove Sysco shares to achieve a new high.
Sysco has surpassed the Zacks Consensus Estimate in six out of the last eight quarters, missing it on occasion and matched the same in one quarter, posting an average surprise of 7.9%. In its last reported quarter, i.e. second quarter fiscal 2013, the company results outperformed the Zacks Consensus Estimate by 19.5%.
Adjusted earnings of 49 cents also exceeded the prior-year quarter earnings by 4.3%, driven by solid top-line growth, gains from acquisitions, prudent expense management and moderating input cost environment.
Sysco's sales grew 5.4% on a year-over-year basis to $10.8 billion in the second quarter, driven by volume growth. Second quarter sales also beat the Zacks Consensus Estimate of $10.7 billion. Acquisitions and currency translation also impacted sales favorably.
Higher sales also drove the company’s gross profit and adjusted operating profits despite higher adjusted operating expenses.
During the quarter, Sysco completed the acquisition of four independent foodservice companies, whose combined aggregate annual revenues amounted to $520 million in fiscal 2012.
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 over the long term.
Other Stocks to Consider
Sysco holds a Zacks Rank #4 (Sell). However, there are other favorable stocks in the retail and wholesale sector that are worth considering. These include Green Mountain Coffee Roasters Inc (GMCR), Natural Grocers By Vitamin Cotta (NGVC) and Safeway Inc (SWY). Green Mountain and Safeway hold a Zacks Rank #1 (Strong Buy), while Natural Grocers carries a Zacks Rank #2 (Buy).
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