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Sysco (SYY) to Report Q1 Earnings: What Awaits the Stock?

Zacks Equity Research
·4 min read

Sysco Corporation SYY is likely to register top- and bottom-line declines when it reports first-quarter fiscal 2021 numbers on Nov 3. The Zacks Consensus Estimate for revenues is pegged at $11,497 million, which indicates a slump of 24.9% from the year-ago quarter’s reported figure. Nonetheless, we note that the rate of sales decline is likely to decelerate on a sequential basis. The company had witnessed a decline of 42.7% in the last reported quarter.

The Zacks Consensus Estimate for quarterly earnings went down by 3 cents in the past 30 days to 20 cents per share. The current Zacks Consensus Estimate indicates that the company is likely to swing back to profit following a loss in the last-reported quarter. However, the consensus estimate suggests a sharp decline from earnings of 98 cents reported in the year-ago quarter.

Aspects That May Impact Q1 Metrics

The coronavirus pandemic has been causing disruptions in Sysco’s business, especially in its food-away-from-home channel in the United States. The downside is likely to have continued during the first quarter, as consumers continue avoiding dining outside amid the ongoing pandemic. Sluggish volumes across customer segments like restaurant, education and hospitality are likely to have put pressure on the food-away-from home business. This is a concern for the company’s top line.

Apart from this, food-cost inflation is likely to have hurt margins in the U.S. Foodservice channel. Also, any adverse movement in currency exchange rates as well as rise in operating expenses may have put pressure on the company’s performance during the quarter under review.

Nevertheless, we note that Sysco has been undertaking strategic efforts to support its business amid the pandemic. To this end, the company has been on track with efforts like offering meal kits, contactless menus and takeouts. Additionally, the company has made changes in its distribution model to cater to customers such as retailers and grocers, where it is seeing favorable demand. Also, Sysco has been making use of its solid logistics capabilities to offer deals like carrier services, cross-docking and freight brokerage.

Sysco Corporation Price, Consensus and EPS Surprise

Sysco Corporation Price, Consensus and EPS Surprise
Sysco Corporation Price, Consensus and EPS Surprise

Sysco Corporation price-consensus-eps-surprise-chart | Sysco Corporation Quote

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Sysco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Sysco carries a Zacks Rank #4 (Sell) and an Earnings ESP of +7.69%.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat.

Nu Skin Enterprises, Inc. NUS currently has an Earnings ESP of +3.54% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Grocery Outlet Holding Corp. GO currently has an Earnings ESP of +10.76% and a Zacks Rank #2.

Tyson Foods, Inc. TSN has an Earnings ESP of +9.57% and a Zacks Rank #3, at present.

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