Sysco Corporation ( SYY Quick Quote SYY - Free Report) is likely to register a decline in both top and bottom lines when it releases second-quarter fiscal 2021 numbers on Feb 2. The Zacks Consensus Estimate for revenues is pegged at $11,853 million, which suggests a decline of 21.1% from the figure reported in the prior-year quarter. The Zacks Consensus Estimate for the bottom line has fallen a cent in the past seven days to 35 cents per share, which indicates a slump of 58.8% from the year-ago quarter’s reported figure. Notably, Sysco’s bottom line has outperformed the Zacks Consensus Estimate by 70% in the last reported quarter and it has a trailing four-quarter earnings surprise of 20.4%, on average. Key Factors to Note
Sysco has been bearing the brunt of coronavirus-related hurdles. This was also witnessed in first-quarter fiscal 2021 results, wherein both top and bottom lines deteriorated year over year. Sales declined in both U.S. Foodservice and International Foodservice segments. Certainly, lower volumes in the food-away-from-home channel have been a deterrent. Increased social distancing had a considerable adverse impact on the company’s restaurant, education and hospitality customer segments. In its earnings call, management said that new restrictions on Sysco’s customers during the second quarter stalled the recovery and the situation might get worse, given the increased curbs amid the pandemic. After first-quarter-end, certain regions were witnessing elevated restrictions on restaurant operations, which is anticipated to have weighed on second-quarter sales, especially in Europe. Management, then, stated that it is cautious about the new regulations and altering restrictions throughout France, Ireland and the United Kingdom.
Nonetheless, Sysco is making robust efforts to manage business amid the pandemic. The company has been committed to helping its customers amid the crisis. Incidentally, the company said that it was delivering holiday toolkits for restaurant tours, coming up with marketplace pop-up shops, offering solutions and prolonging the outdoor-dining season. Moreover, Sysco’s culinary experts have been assisting restaurants in optimizing their menus to boost profitability and modify offerings for takeout and delivery efficiency. Apart from this, the company’s focus on transformation initiative bodes well. To this end, the company has been committed to becoming more digitally oriented, as part of which it is making investments to enhance its Sysco Shop digital order platform, among other efforts. Further, Sysco is concentrating on improving its sales model. The company is also on track to regionalize its U.S. operations, which is likely to enhance efficiency. Its fourth initiative involves removing structural fixed costs. That being said, Sysco has been encountering inflation in the meat category in the U.S. Foodservice unit for a while now. What the Zacks Model Unveils
Our proven model predicts 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 currently has a Zacks Rank #3 and an Earnings ESP of +1.91%. Other Stocks With Favorable Combinations
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season.
Newell Brands ( NWL Quick Quote NWL - Free Report) has an Earnings ESP of +2.70% and a Zacks Rank #1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here. Monster Beverage ( MNST Quick Quote MNST - Free Report) has an Earnings ESP of +21.81% and a Zacks Rank #3, at present. Estee Lauder ( EL Quick Quote EL - Free Report) currently has an Earnings ESP of +0.55% and a Zacks Rank #3. The Hottest Tech Mega-Trend of All
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