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Sysco Looks Attractive on Strong Foodservices and Strategies
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While most U.S. food companies are having a tough time battling high costs and stiff competition, few such as Sysco Corporation (SYY - Free Report) are faring well backed by their well-yielding strategies.
Foodservices Looks Bright
Sysco’s U.S. Foodservices unit has been performing well for quite some time, with the trend continuing in fourth-quarter fiscal 2018. In the said period, sales in the U.S. Foodservice Operations division advanced 6.1% year over year, wherein local case volumes increased 5% and total case volumes improved 5.3%. Notably, local case volumes in the segment have been rising year over year for 17 consecutive quarters. Additionally, rising restaurant sales have been benefitting the company’s U.S. Operations for a while. Well, a rosy economic scenario, marked by a strong labor market and favorable consumer spending, has been favoring restaurant sales.
3-Year Plan Concludes Well, Strategies for 2020 on Track
With the fourth-quarter results, the company marked the successful completion of three-year (FY15-FY18) financial plan, wherein it surpassed certain goals. During this period, the company achieved local case growth of 3%, adjusted gross profit CAGR of 4.2% and adjusted operating income CAGR of 11.1%.
Further, for 2020, Sysco outlined key growth strategies at New York Investor Day event in December 2017, wherein it also highlighted its three-year financial goals. Additionally, the company’s core strategies include enhancing consumers’ experience, optimizing business as well as stimulating power of its people and achieving operational efficacy. In this regard, the company is focused on enhancing assortments, making constant innovations, ensuring food safety and revitalizing brands. Further, to evolve with changing consumer preferences, Sysco is committed toward investing in technology and enhancing e-commerce operations. Moreover, it plans to improve supply chain, increase transparency, enhance deliveries and manage product costs, effectively.
Strengthening Portfolio via Buyouts
The company has been carrying out various acquisitions over the years to grow distribution network and customer base as well as boost long-term growth. To this end, Sysco concluded several meaningful acquisitions in fiscal 2018 including HFM in Hawaii, Doerle Food Service in Louisiana and Kent Frozen Foods in the U.K. Also, the company inked a small deal in Sweden and bought the remaining 50% stake in Mayca Distribuidores of Costa Rica. Previous moves in this regard include the buyout Supplies on the Fly, North Star Seafood, Gilchrist & Soames and 50% stake in Mexico-based Pacific Star Foodservice among others.
Wrapping Up
We note that Sysco witnesses cost inflation across some of its input categories as well as higher inbound freight costs. Nevertheless, the company has been able to tide over such hurdles with ease, backed by robust savings efforts. Similarly, other food companies such as McCormick & Company (MKC - Free Report) , General Mills (GIS - Free Report) and J.M. Smucker (SJM - Free Report) have also been combating hurdles related to high costs with the help of robust cost-saving efforts. Moreover, Sysco’s well-spun strategic endeavors have boosted financial position, which has enabled long-term investments for driving growth and strengthening portfolio. All said, we expect the company to maintain its position as a prominent player in the food space.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Sysco Looks Attractive on Strong Foodservices and Strategies
While most U.S. food companies are having a tough time battling high costs and stiff competition, few such as Sysco Corporation (SYY - Free Report) are faring well backed by their well-yielding strategies.
Foodservices Looks Bright
Sysco’s U.S. Foodservices unit has been performing well for quite some time, with the trend continuing in fourth-quarter fiscal 2018. In the said period, sales in the U.S. Foodservice Operations division advanced 6.1% year over year, wherein local case volumes increased 5% and total case volumes improved 5.3%. Notably, local case volumes in the segment have been rising year over year for 17 consecutive quarters. Additionally, rising restaurant sales have been benefitting the company’s U.S. Operations for a while. Well, a rosy economic scenario, marked by a strong labor market and favorable consumer spending, has been favoring restaurant sales.
3-Year Plan Concludes Well, Strategies for 2020 on Track
With the fourth-quarter results, the company marked the successful completion of three-year (FY15-FY18) financial plan, wherein it surpassed certain goals. During this period, the company achieved local case growth of 3%, adjusted gross profit CAGR of 4.2% and adjusted operating income CAGR of 11.1%.
Further, for 2020, Sysco outlined key growth strategies at New York Investor Day event in December 2017, wherein it also highlighted its three-year financial goals. Additionally, the company’s core strategies include enhancing consumers’ experience, optimizing business as well as stimulating power of its people and achieving operational efficacy. In this regard, the company is focused on enhancing assortments, making constant innovations, ensuring food safety and revitalizing brands. Further, to evolve with changing consumer preferences, Sysco is committed toward investing in technology and enhancing e-commerce operations. Moreover, it plans to improve supply chain, increase transparency, enhance deliveries and manage product costs, effectively.
Strengthening Portfolio via Buyouts
The company has been carrying out various acquisitions over the years to grow distribution network and customer base as well as boost long-term growth. To this end, Sysco concluded several meaningful acquisitions in fiscal 2018 including HFM in Hawaii, Doerle Food Service in Louisiana and Kent Frozen Foods in the U.K. Also, the company inked a small deal in Sweden and bought the remaining 50% stake in Mayca Distribuidores of Costa Rica. Previous moves in this regard include the buyout Supplies on the Fly, North Star Seafood, Gilchrist & Soames and 50% stake in Mexico-based Pacific Star Foodservice among others.
Wrapping Up
We note that Sysco witnesses cost inflation across some of its input categories as well as higher inbound freight costs. Nevertheless, the company has been able to tide over such hurdles with ease, backed by robust savings efforts. Similarly, other food companies such as McCormick & Company (MKC - Free Report) , General Mills (GIS - Free Report) and J.M. Smucker (SJM - Free Report) have also been combating hurdles related to high costs with the help of robust cost-saving efforts. Moreover, Sysco’s well-spun strategic endeavors have boosted financial position, which has enabled long-term investments for driving growth and strengthening portfolio. All said, we expect the company to maintain its position as a prominent player in the food space.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>