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Factors to Consider as Sysco (SYY) Gears Up for Q1 Earnings

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Sysco Corporation (SYY - Free Report) is likely to display year-over-year growth in the top line, when it reports first-quarter fiscal 2022 earnings on Nov 9. The Zacks Consensus Estimate for revenues is pegged at $15,765 million, suggesting a rise of 33.9% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for quarterly earnings has dropped by a penny over the past 30 days to 85 cents per share, which indicates a significant rise from 34 cents reported in the prior-year period. In the last reported quarter, the company delivered an earnings surprise of 24.6%. This marketer and distributor of food and related products has a trailing four-quarter earnings surprise of 13.3%, on average.

Sysco Corporation Price, Consensus and EPS Surprise

Sysco Corporation Price, Consensus and EPS Surprise

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

Key Factors to Note

Sysco’s focus on its Recipe for Growth program bodes well. This program involves five strategic pillars, including enhancing customers’ experiences via digital tools. In this regard, the company’s Sysco Shop platform and the new pricing software are working well. Further, the company is focused on improving the supply chain to cater to customers efficiently and consistently, due to better delivery and omnichannel inventory management.

Next, Sysco aims at providing customer-oriented merchandising and marketing solutions to augment sales. The company also targets team-based selling, with emphasis on important cuisines. Finally, Sysco is focused on cultivating new capacities, channels and segments, alongside sponsoring investments via cost-saving initiatives. The impact of these upsides is likely to have aided in the quarter under review.

However, product-cost inflation remains a concern. Also, on its fourth-quarter fiscal 2021 earnings call, management stated that the company is encountering a tough labor market and witnessing challenges associated with product supply. The shortage of products and labor has been putting pressure on the company’s cost structure.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Sysco. 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. However, that’s not the case here.

Sysco currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of +8.24%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks with Favorable Combinations

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 this season.

United Natural (UNFI - Free Report) has an Earnings ESP of +9.24% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

US Foods (USFD - Free Report) has an Earnings ESP of +5.26% and carries a Zacks Rank of 3, currently.

Hormel Foods (HRL - Free Report) has an Earnings ESP of +1.59% and currently holds a Zacks Rank #3.

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