Sysco's (SYY) Upcoming Facility to Help Meet Growing Demand
Sysco Corporation SYY is focused on cultivating new capacities to accelerate growth. Moving along these lines, the leading global foodservice distribution company broke ground on a new facility, Sysco Arizona East.
The 353,600-square-foot facility requires an investment of $102 million. Management expects to start the unit’s construction by this fall, with operations beginning in the spring of 2025.
The Arizona East manufacturing facility will aid the company in fulfilling the demand coming from the growing local market. Sysco will provide its services to several new customers in the market, which includes restaurants, education, healthcare and travel and leisure locations across Arizona.
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What Else Should You Know?
The Zacks Rank #3 (Hold) company is focused on its Recipe for Growth, strengthening its capacities across sales and supply chain. The program involves five strategic priorities to enable the company to grow 1.5 times faster than the market by FY24 end. In this regard, the company is enhancing customers’ experience via digital tools and providing customer-oriented merchandising and marketing solutions. Sysco is focused on cultivating new capacities, channels and segments and sponsoring investments via cost-saving initiatives.
Sysco Corporation has been undertaking various acquisitions over the years to grow its distribution network and customer base to boost long-term growth. In June 2023, Sysco’s specialty produce business — FreshPoint — took over BIX Produce. The buyout helps FreshPoint strengthen its geographical presence in unexplored areas and enhance its specialty produce offerings. In February 2022, SYY concluded the acquisition of The Coastal Companies, which operates under Sysco’s FreshPoint business. SYY delivered a solid business performance in the fourth quarter of fiscal 2023, with strong FreshPoint business performance.
Final Thoughts
Sysco has been encountering product cost inflation in the U.S. Foodservice unit for a while now. Although Sysco’s size and scale advantages and strong balance sheet position it for growth in fiscal 2024, the company expects the market to grow at a lower rate than fiscal 2023. This might put pressure on its volumes, which, in turn, might affect sales. Nevertheless, supply chain productivity and overall cost management are likely to offer some respite.
The company’s shares have dropped 14.2% in the past three months compared with the industry’s decline of 17%.
3 Appetizing Food Bets
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The Zacks Consensus Estimate for Flowers Foods’ current financial year sales suggests growth of 6.7% from the year-ago period’s actuals. FLO has a trailing four-quarter earnings surprise of 7.6% on average.
The Kraft Heinz Company KHC, a food and beverage product company, currently carries a Zacks Rank #2. KHC has a trailing four-quarter earnings surprise of 11.3% on average.
The Zacks Consensus Estimate for Kraft Heinz’s current fiscal-year sales suggests growth of 2.2% from the corresponding year-ago reported figure.
Post Holdings POST, a consumer-packaged goods holding company, currently carries a Zacks Rank #2. POST has a trailing four-quarter earnings surprise of 59.6% on average.
The Zacks Consensus Estimate for Post Holdings’ current fiscal year sales and earnings suggests growth of 13.2% and 189.3%, respectively, from the corresponding year-ago reported figures.
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