Sysco Corporation (SYY Quick QuoteSYY - Free Report) appears to be in a strong position. The company is gaining on solid food-away-from-home trends and a focus on its Recipe for Growth plan. The impact of these upsides was witnessed in the third quarter of fiscal 2022, wherein the top and bottom lines rose year over year and beat the Zacks Consensus Estimate. Management offered an encouraging view for fiscal 2022.

The Zacks Consensus Estimate for current fiscal-year earnings per share (EPS) has jumped from $3.04 to $3.23 over the past 60 days. This Zacks Rank #2 (Buy) stock has risen 7% in the past six months against the industry’s decline of 5.5%. Let’s delve deeper.

Factors Working Well for Sysco

Sysco is on track with its Recipe for Growth plan, which involves five strategic priorities aimed at enabling the company to grow 1.5 times faster than the market by FY24-end. The five strategic pillars include enhancing customers’ experiences via digital tools. In this regard, SYY’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 with better delivery and omnichannel inventory management. Next, Sysco aims at providing customer-oriented merchandising and marketing solutions to augment sales. The company also targets having team-based selling, with an emphasis on important cuisines. Finally, Sysco is focused on cultivating new capacities, channels and segments alongside sponsoring investments via cost-saving initiatives.

Sysco is progressing well with its Recipe for Growth and earlier unveiled plans to generate cost curtailments of $750 million for the FY21-FY24 period.

Further, Sysco has been carrying out various acquisitions over the years to grow its distribution network and customer base and boost long-term growth. In February 2022, SYY concluded the acquisition of The Coastal Companies, which will operate under Sysco’s specialty produce business – FreshPoint. Before this, Sysco acquired Greco and Sons in the first quarter of fiscal 2022. We note that these acquisitions go in tandem with Sysco’s Recipe for Growth. In earlier developments, Sysco acquired J. Kings Food Service Professionals in August 2019. These buyouts have been fueling growth for the company.

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A Look at Q3 & Ahead

Sysco’s third-quarter fiscal 2022 performance surpassed management’s anticipation and led to a raised EPS view. The company witnessed strong consumer and customer away-from-home demand in late February and March as it snapped back from the Omicron impact. Further, the company continued to witness robust market share gains in the United States and internationally, reflecting strength in its Recipe for Growth plan. SYY witnessed considerable volume gains. It also delivered an increased gross profit per case due to its efforts to counter product and fuel inflation. The company made solid improvements in operating expense leverage, including significantly lower snapback expenses. Sysco is also on track to improve the efficiency of its supply chain.

Robust sales and continued progress in enhancing operating expenses led to strong profit growth. Sysco’s adjusted earnings of 71 cents per share crushed the Zacks Consensus Estimate of 54 cents. The bottom line increased considerably from the year-ago period’s earnings of 22 cents per share. Sales of $16,902.1 million soared 42.9% year over year and beat the Zacks Consensus Estimate of $16,065 million. The robust third-quarter performance reflects solid demand and strong progress in the company’s transformation efforts. Sysco generated profitability despite the double-digit inflation and focused snapback and transformation investments.

Sysco made solid progress in the third quarter and expects to see further growth in the fourth quarter. It expects the fourth-quarter EPS in the range of $1.05-$1.15 compared with the 71 cents delivered in the fourth quarter of fiscal 2021. Management’s optimism for the fourth quarter is based on the expectations of a continued market revival, market share gains, the efficient pass-through of higher costs and improved operating expenses (stemming from reduced snapback and productivity-related costs). However, the fourth quarter of fiscal 2021 included an extra week, which is likely to affect comparisons. However, management remains optimistic about its business and raised its adjusted EPS guidance for fiscal 2022. Sysco now expects an EPS in the $3.16-$3.26 band, up from the previous range of $3-$3.10.

3 Other Staple Stocks Worth a Look

Some other top-ranked stocks are Pilgrim’s Pride (PPC Quick QuotePPC - Free Report) , United Natural Foods (UNFI Quick QuoteUNFI - Free Report) and Campbell Soup (CPB Quick QuoteCPB - Free Report) .

Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, sports a Zacks Rank #1 (Strong Buy). Pilgrim’s Pride has a trailing four-quarter earnings surprise of 31.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for PPC’s current financial-year EPS suggests growth of almost 43% from the year-ago reported number.

United Natural, which distributes natural, organic, specialty, produce, and conventional grocery and non-food products, carries a Zacks Rank #2. United Natural has a trailing four-quarter earnings surprise of 29.9%, on average.

The Zacks Consensus Estimate for UNFI’s current financial-year sales and EPS suggests growth of 7.2% and 4.9%, respectively, from the year-ago reported number.

Campbell Soup, which manufactures and markets food and beverage products, currently carries a Zacks Rank #2. Campbell Soup has a trailing four-quarter earnings surprise of 10.8%, on average.

The Zacks Consensus Estimate for CPB’s current financial-year sales suggests growth of 0.5% from the year-ago reported figure.