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Why Is Sysco (SYY) Down 2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Sysco (SYY - Free Report) . Shares have lost about 2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sysco due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sysco Q2 Earnings Lag Estimates on High Costs, Sales Rise
Sysco posted second-quarter fiscal 2022 results, wherein the top and bottom lines increased year over year and the former came ahead of the Zacks Consensus Estimate.
Sysco’s second-quarter bottom line was affected by greater-than-anticipated operating costs stemming from the pandemic. Also, the Omicron variant weighed on the customers’ top line as well as operating hours.
The company’s adjusted earnings of 57 cents per share missed the Zacks Consensus Estimate of 69 cents. However, the bottom line increased considerably from the year-ago period’s earnings of 17 cents per share.
The company reported sales of $16,320.2 million, which soared 41.2% year over year and beat the Zacks Consensus Estimate of $16,025 million. Management stated that sales growth decelerated in December due to hurdles stemming from the Omicron variant. Foreign currency had a favorable impact of 0.3% on the top line.
Gross profit surged 37.8% to $2,891.2 million, while the gross margin contracted 44 basis points (bps) to 17.7%. This year-over-year growth in gross profit was fueled by elevated volumes along with efficient inflation management. Foreign currency had a positive impact of 0.2% on gross profit. Adjusted operating income of $495.7 million grew $261.6 million from the year-ago period.
U.S. Foodservice Operations: In the reported quarter, segment sales jumped 45.1% to $11,498.2 million. Local case volumes within U.S. Broadline operations jumped 17.6% and total case volumes surged 22.5%. Both of these increases reflect organic improvements. Gross profit escalated by 37.2% to $2,139.3 million and the gross margin fell 107 bps to 18.6%. The U.S. Broadline saw 14.6% product cost inflation mainly due to the meat and poultry categories.
International Foodservice Operations: Segment sales soared 42.6% to $2,806.3 million in the quarter. Foreign-exchange fluctuations positively impacted segment sales by 1.7%. On a constant-currency (cc) basis, sales advanced 40.9% to $2,772.2 million. Gross profit jumped 51.4% to $565.9 million and the gross margin expanded 116 bps to 20.2%. At cc, gross profit rose 50.3% to $561.9 million. Currency movements aided the segment’s gross profit by 1.1%.
SYGMA’s sales advanced 16.5% to $1,771.3 million. Gross profit rose 5.9% to about $137 million, while the gross margin contracted 77 bps to 7.73%.
Other segment’s sales jumped 66.7% to $244.5 million.
Other Updates
Sysco ended the quarter with cash and cash equivalents of $1,374.3 million, long-term debt of $10,593.4 million and total shareholders’ equity of $1,221.1 million. In the first half of fiscal 2022, the company generated cash flow from operations of $377 million and free cash flow amounted to $201.1 million.
In the second quarter, SYY repurchased shares worth $416 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -33.33% due to these changes.
VGM Scores
At this time, Sysco has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Sysco has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Sysco (SYY) Down 2% Since Last Earnings Report?
A month has gone by since the last earnings report for Sysco (SYY - Free Report) . Shares have lost about 2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sysco due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sysco Q2 Earnings Lag Estimates on High Costs, Sales Rise
Sysco posted second-quarter fiscal 2022 results, wherein the top and bottom lines increased year over year and the former came ahead of the Zacks Consensus Estimate.
Sysco’s second-quarter bottom line was affected by greater-than-anticipated operating costs stemming from the pandemic. Also, the Omicron variant weighed on the customers’ top line as well as operating hours.
The company’s adjusted earnings of 57 cents per share missed the Zacks Consensus Estimate of 69 cents. However, the bottom line increased considerably from the year-ago period’s earnings of 17 cents per share.
The company reported sales of $16,320.2 million, which soared 41.2% year over year and beat the Zacks Consensus Estimate of $16,025 million. Management stated that sales growth decelerated in December due to hurdles stemming from the Omicron variant. Foreign currency had a favorable impact of 0.3% on the top line.
Gross profit surged 37.8% to $2,891.2 million, while the gross margin contracted 44 basis points (bps) to 17.7%. This year-over-year growth in gross profit was fueled by elevated volumes along with efficient inflation management. Foreign currency had a positive impact of 0.2% on gross profit. Adjusted operating income of $495.7 million grew $261.6 million from the year-ago period.
U.S. Foodservice Operations: In the reported quarter, segment sales jumped 45.1% to $11,498.2 million. Local case volumes within U.S. Broadline operations jumped 17.6% and total case volumes surged 22.5%. Both of these increases reflect organic improvements. Gross profit escalated by 37.2% to $2,139.3 million and the gross margin fell 107 bps to 18.6%. The U.S. Broadline saw 14.6% product cost inflation mainly due to the meat and poultry categories.
International Foodservice Operations: Segment sales soared 42.6% to $2,806.3 million in the quarter. Foreign-exchange fluctuations positively impacted segment sales by 1.7%. On a constant-currency (cc) basis, sales advanced 40.9% to $2,772.2 million. Gross profit jumped 51.4% to $565.9 million and the gross margin expanded 116 bps to 20.2%. At cc, gross profit rose 50.3% to $561.9 million. Currency movements aided the segment’s gross profit by 1.1%.
SYGMA’s sales advanced 16.5% to $1,771.3 million. Gross profit rose 5.9% to about $137 million, while the gross margin contracted 77 bps to 7.73%.
Other segment’s sales jumped 66.7% to $244.5 million.
Other Updates
Sysco ended the quarter with cash and cash equivalents of $1,374.3 million, long-term debt of $10,593.4 million and total shareholders’ equity of $1,221.1 million. In the first half of fiscal 2022, the company generated cash flow from operations of $377 million and free cash flow amounted to $201.1 million.
In the second quarter, SYY repurchased shares worth $416 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -33.33% due to these changes.
VGM Scores
At this time, Sysco has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Sysco has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.