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Sysco (SYY) to Buy Edward Don, Recipe for Growth on Track
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Sysco Corporation (SYY - Free Report) has long been committed to strengthening its business through prudent acquisitions. The company revealed its intentions to take over Edward Don & Company (“DON”), which boasts annual revenues of roughly $1.3 billion. This buyout underscores Sysco’s focus on its Recipe for Growth yet again.
Inside the Headlines
A prominent distributor of foodservice equipment, supplies and disposables, DON caters to a diverse clientele across the restaurant and foodservice industry in the United States. Once the acquisition is concluded, Chicago-based DON will operate as an independent specialty division under Sysco. Markedly, SYY plans to retain DON's leadership team and all current employees.
This buyout is likely to solidify Sysco’s existing business by integrating new capacities and diversified product offerings. It will also help Sysco establish a specialty Equipment and Supplies platform, which will offer a more comprehensive selection and improved customer service.
DON will bring to Sysco a wide-reaching distribution network encompassing more than 1.4 million square feet of distribution centers and office facilities located in core U.S. regions. It will also bring an experienced field sales team dedicated to equipment and supplies, along with design and build capabilities that go in tandem with Sysco's current operations.
Image Source: Zacks Investment Research
Recipe for Growth Bodes Well
Sysco has been focused on its Recipe for Growth, which is strengthening the company’s capacities across sales and the supply chain. The program 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’ experience via digital tools. In this regard, the company’s Sysco Shop platform and the new pricing software are working well. Further, SYY 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 team-based selling, with an emphasis on important cuisines. Finally, Sysco is focused on cultivating new capacities, channels and segments, along with sponsoring investments via cost-saving initiatives. Sysco expects the Recipe for Growth plan to drive top-and-bottom-line growth in fiscal 2024.
What’s More?
Sysco has been encountering product cost inflation in the U.S. Foodservice unit for a while now. Also, the company witnessed slower overall industry market volume growth in the fourth quarter of fiscal 2023. In fiscal 2024, it expects the market to grow at a lower rate than fiscal 2023. The company’s shares have tumbled 11.8% in the past three months while performing better than the industry’s decline of 14.4%.
However, supply-chain productivity as well as overall cost management are likely to offer respite. Also, a constant focus on Recipe for Growth is likely to aid growth for this Zacks Rank #3 (Hold) company.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 27.4% and 20.1%, respectively, from the year-ago reported numbers.
Flowers Foods (FLO - Free Report) emphasizes providing high-quality baked items. The company currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales suggests growth of 6.7% from the year-ago period’s actuals. FLO has a trailing four-quarter earnings surprise of 7.6%, on average.
The Kraft Heinz Company (KHC - Free Report) , a food and beverage product company, currently carries a Zacks Rank #2. KHC has a trailing four-quarter earnings surprise of 11.3%, on average.
The Zacks Consensus Estimate for Kraft Heinz’s current fiscal-year sales suggests growth of 2.2% from the corresponding year-ago reported figure.
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Sysco (SYY) to Buy Edward Don, Recipe for Growth on Track
Sysco Corporation (SYY - Free Report) has long been committed to strengthening its business through prudent acquisitions. The company revealed its intentions to take over Edward Don & Company (“DON”), which boasts annual revenues of roughly $1.3 billion. This buyout underscores Sysco’s focus on its Recipe for Growth yet again.
Inside the Headlines
A prominent distributor of foodservice equipment, supplies and disposables, DON caters to a diverse clientele across the restaurant and foodservice industry in the United States. Once the acquisition is concluded, Chicago-based DON will operate as an independent specialty division under Sysco. Markedly, SYY plans to retain DON's leadership team and all current employees.
This buyout is likely to solidify Sysco’s existing business by integrating new capacities and diversified product offerings. It will also help Sysco establish a specialty Equipment and Supplies platform, which will offer a more comprehensive selection and improved customer service.
DON will bring to Sysco a wide-reaching distribution network encompassing more than 1.4 million square feet of distribution centers and office facilities located in core U.S. regions. It will also bring an experienced field sales team dedicated to equipment and supplies, along with design and build capabilities that go in tandem with Sysco's current operations.
Image Source: Zacks Investment Research
Recipe for Growth Bodes Well
Sysco has been focused on its Recipe for Growth, which is strengthening the company’s capacities across sales and the supply chain. The program 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’ experience via digital tools. In this regard, the company’s Sysco Shop platform and the new pricing software are working well. Further, SYY 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 team-based selling, with an emphasis on important cuisines. Finally, Sysco is focused on cultivating new capacities, channels and segments, along with sponsoring investments via cost-saving initiatives. Sysco expects the Recipe for Growth plan to drive top-and-bottom-line growth in fiscal 2024.
What’s More?
Sysco has been encountering product cost inflation in the U.S. Foodservice unit for a while now. Also, the company witnessed slower overall industry market volume growth in the fourth quarter of fiscal 2023. In fiscal 2024, it expects the market to grow at a lower rate than fiscal 2023. The company’s shares have tumbled 11.8% in the past three months while performing better than the industry’s decline of 14.4%.
However, supply-chain productivity as well as overall cost management are likely to offer respite. Also, a constant focus on Recipe for Growth is likely to aid growth for this Zacks Rank #3 (Hold) company.
3 Appetizing Picks
Lamb Weston (LW - Free Report) , which offers frozen potato products, currently sports a Zacks Rank #1 (Strong Buy). LW delivered an earnings surprise of 46.2% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 27.4% and 20.1%, respectively, from the year-ago reported numbers.
Flowers Foods (FLO - Free Report) emphasizes providing high-quality baked items. The company currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales suggests growth of 6.7% from the year-ago period’s actuals. FLO has a trailing four-quarter earnings surprise of 7.6%, on average.
The Kraft Heinz Company (KHC - Free Report) , a food and beverage product company, currently carries a Zacks Rank #2. KHC has a trailing four-quarter earnings surprise of 11.3%, on average.
The Zacks Consensus Estimate for Kraft Heinz’s current fiscal-year sales suggests growth of 2.2% from the corresponding year-ago reported figure.