Sysco Corporation (SYY Quick QuoteSYY - Free Report) delivered second-quarter fiscal 2025 results, wherein both top and bottom lines increased year over year. Sales beat the Zacks Consensus Estimate. 

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Sysco witnessed solid performance across International, SYGMA and National sales businesses, with the International segment standing out. The company also saw progress in the local business, highlighted by improvements in new customer acquisition rates and Net Promoter Scores. Ongoing control over operating expenses contributed to margin expansion. Sysco expects to drive enhanced local case volume performance in the second half of fiscal 2025, courtesy of its investments in sales professionals and expanded specialty offerings. 

With sustained business momentum, the company reaffirmed its full-year guidance, expecting sales and adjusted EPS growth of 4-5% and 6-7%, respectively. Additionally, the company boosted its share repurchase plan for the year to $1.25 billion from the previously announced $1 billion.

Closer Look at SYY’s Q2 Results

Sysco’s adjusted earnings of 93 cents per share came in line with the Zacks Consensus Estimate. The bottom line rose 4.5% year over year.

The global food product maker and distributor reported sales of $20,151 million, which jumped 4.5% year over year. The metric surpassed the Zacks Consensus Estimate of $20,102 million. Currency headwinds lowered the company’s sales by $21 million. 

Sysco’s gross profit rose 3.9% to $3.7 billion, backed by volume growth and efficient management of product cost inflation. However, the gross margin contracted 11 basis points to 18.1%. 

SYY witnessed product cost inflation of 2.1% at the overall enterprise level, measured by the estimated change in product costs in the meat and poultry categories.

The company’s operating expenses rose 4.4%, thanks to higher volumes, increased business investments and cost inflation. The adjusted operating expenses escalated 3.5%.

Sysco’s operating income inched up 1.7% to $712 million, while adjusted operating income rose 5.1% to $783 million. SYY’s adjusted EBITDA jumped 4.4% to $969 million.

SYY Provides Insights by Segment

The U.S. Foodservice Operations: In the reported quarter, sales rose 4.1% to $14,044 million. Local case volumes within the U.S. Foodservice dipped 0.9%, while total case volumes within the segment increased 1.4%. Segmental adjusted operating income rose 0.9% to $859 million. The segment’s performance was driven by increased volumes, countered by margin pressures due to mix shifts and business investments.

International Foodservice Operations: In the quarter, segmental sales rose 3.6%, reaching $3,728 million. When adjusted for constant currency (cc), sales was $3,748 million, reflecting a 4.2% increase. Foreign exchange fluctuations lowered segment sales by $20 million in the quarter. Adjusted operating income grew 27.5% to $130 million on a cc basis. Overall, the segment achieved notable sales growth, efficient margin management and profit growth.

SYGMA’s sales were $2,116 million, up 10.6% year over year.

Meanwhile, the Other segment’s sales decreased 7.1% to $263 million.

Sysco’s Financial Health Snapshot

This Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $793 million, long-term debt of $11,393 million and total shareholders’ equity of nearly $2,014 million.

Cash flow from operations was $498 million for the first 26 weeks of fiscal 2025, while free cash flow amounted to $331 million. Capital expenditures, net of proceeds from sales of plant and equipment, were $167 million during this time.

During the first 26 weeks, Sysco returned $803 million to its shareholders through share buybacks worth $300 million and dividends of $503 million.

Shares of Sysco have gained 3.6% in the past three months against the industry’s decline of 9.2%.

Some Solid Staple Bets

We have highlighted three better-ranked stocks from the Consumer Staples sector, namely United Natural Foods, Inc. (UNFI Quick QuoteUNFI - Free Report) , Freshpet (FRPT Quick QuoteFRPT - Free Report) and Tyson Foods (TSN Quick QuoteTSN - Free Report) .

United Natural currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

UNFI delivered a trailing four-quarter earnings surprise of 553.1%, on average. The consensus estimate for United Natural’s current financial-year sales and earnings indicates growth of 0.3% and 442.9%, respectively, from the year-ago period’s reported figure.

Freshpet, a pet food company, presently sports a Zacks Rank #1. FRPT delivered a trailing four-quarter earnings surprise of 144.5%, on average.

The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 27.2% and 228.6%, respectively, from the year-ago period’s reported figure.

Tyson Foods, a meat products behemoth, currently carries a Zacks Rank #2 (Buy). TSN delivered a trailing four-quarter average earnings surprise of around 57%.

The consensus estimate for Tyson Foods’ current fiscal-year sales and earnings indicates growth of about 2% and 13.6%, respectively, from the prior-year reported levels.