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Will Sysco's $500M AI Push Support Its Higher Growth Targets?
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Key Takeaways
Sysco targets at least $500M in AI-powered efficiency savings by fiscal 2029.
AI initiatives span truck routing, warehouse productivity, procurement and back-office activities.
Sysco raised fiscal 2028-2029 sales growth to 4-7% and adjusted EPS growth to 9-11%.
Sysco Corporation (SYY - Free Report) is sharpening focus on profitable growth and operating efficiency as it enters fiscal 2027 with solid momentum. The foodservice distribution giant reaffirmed its fiscal 2027 financial outlook while unveiling a multi-year AI-powered efficiency program aimed at lowering structural costs and supporting stronger earnings growth over the next several years.
For fiscal 2027, Sysco continues to expect net sales growth of roughly 6-7%, taking revenues to about $90 billion. Adjusted earnings are projected between $5.02 and $5.12 per share, implying growth of 9-11% on a 53-week basis. Excluding the extra week, the midpoint of the adjusted EPS outlook remains at the high end of the company’s long-term growth range.
A major part of the update is Sysco’s target of at least $500 million in AI-powered efficiency savings by fiscal 2029. The initiative builds on the $100 million of net cost savings already incorporated into the fiscal 2027 outlook. Key areas include modernizing truck-routing systems, improving warehouse productivity, reducing miles driven, automating merchandising and procurement, strengthening strategic sourcing, controlling indirect spending and simplifying back-office activities.
The expected savings also underpin higher targets for fiscal 2028 and 2029. Sysco now projects annual net sales growth of 4-7%, compared with its previous 4-6% range. Adjusted EPS growth is targeted at 9-11% annually, well above the earlier 6-8% expectation. Greater efficiencies should also support faster deleveraging following the expected completion of the Jetro Restaurant Depot transaction by the third quarter of fiscal 2027.
The outlook is supported by a solid fiscal 2026 foundation. In fiscal 2026, sales rose 3.9%, while free cash flow increased 16.3% to $2.1 billion. Continued volume growth, productivity improvements and AI-led cost reductions could strengthen margins and earnings leverage, making execution on the new efficiency targets an important factor to watch.
SYY’s Zacks Rank & Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have gained 1.7% in the past year against the industry’s decline of 18.3%. However, SYY has underperformed the broader Consumer Staples sector and the S&P 500 index’s growth of 3.4% and 18.4%, respectively, during the same period.
SYY Stock's Past Year Performance
Image Source: Zacks Investment Research
Is Sysco Corporation a Value Play Stock?
Sysco Corporation currently trades at a forward 12-month P/E ratio of 15.84 compared with the industry average of 14.7. This valuation places the stock at a premium relative to peers, indicating broader market expectations around its business stability and ability to navigate current cost and demand dynamics.
SYY Valuation Picture
Image Source: Zacks Investment Research
Stocks to Consider
The Chefs' Warehouse, Inc. (CHEF - Free Report) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. At present, CHEF flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Chefs' Warehouse’s current fiscal-year sales and earnings implies growth of 10.6% and 33.7%, respectively, from the year-ago reported figures. Chefs' Warehouse delivered a trailing four-quarter earnings surprise of 30.4%, on average.
The Vita Coco Company, Inc. (COCO - Free Report) develops, manufactures, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. COCO currently sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 21.9%, on average.
The Zacks Consensus Estimate for Vita Coco’s current fiscal-year sales and earnings indicates growth of 31.6% and 64.7%, respectively, from the year-ago reported numbers.
Darling Ingredients Inc. (DAR - Free Report) develops, produces and sells sustainable natural ingredients from edible and inedible bio-nutrients in North America, Europe, China, South America and internationally. At present, Darling Ingredients holds a Zacks Rank of 2 (Buy). DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.
The consensus estimate for Darling Ingredients’ current fiscal-year sales and earnings implies growth of 11.5% and 926.5%, respectively, from the year-ago figures.
View the Zacks #1 Rank List
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Will Sysco's $500M AI Push Support Its Higher Growth Targets?
Key Takeaways
Sysco Corporation (SYY - Free Report) is sharpening focus on profitable growth and operating efficiency as it enters fiscal 2027 with solid momentum. The foodservice distribution giant reaffirmed its fiscal 2027 financial outlook while unveiling a multi-year AI-powered efficiency program aimed at lowering structural costs and supporting stronger earnings growth over the next several years.
For fiscal 2027, Sysco continues to expect net sales growth of roughly 6-7%, taking revenues to about $90 billion. Adjusted earnings are projected between $5.02 and $5.12 per share, implying growth of 9-11% on a 53-week basis. Excluding the extra week, the midpoint of the adjusted EPS outlook remains at the high end of the company’s long-term growth range.
A major part of the update is Sysco’s target of at least $500 million in AI-powered efficiency savings by fiscal 2029. The initiative builds on the $100 million of net cost savings already incorporated into the fiscal 2027 outlook. Key areas include modernizing truck-routing systems, improving warehouse productivity, reducing miles driven, automating merchandising and procurement, strengthening strategic sourcing, controlling indirect spending and simplifying back-office activities.
The expected savings also underpin higher targets for fiscal 2028 and 2029. Sysco now projects annual net sales growth of 4-7%, compared with its previous 4-6% range. Adjusted EPS growth is targeted at 9-11% annually, well above the earlier 6-8% expectation. Greater efficiencies should also support faster deleveraging following the expected completion of the Jetro Restaurant Depot transaction by the third quarter of fiscal 2027.
The outlook is supported by a solid fiscal 2026 foundation. In fiscal 2026, sales rose 3.9%, while free cash flow increased 16.3% to $2.1 billion. Continued volume growth, productivity improvements and AI-led cost reductions could strengthen margins and earnings leverage, making execution on the new efficiency targets an important factor to watch.
SYY’s Zacks Rank & Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have gained 1.7% in the past year against the industry’s decline of 18.3%. However, SYY has underperformed the broader Consumer Staples sector and the S&P 500 index’s growth of 3.4% and 18.4%, respectively, during the same period.
SYY Stock's Past Year Performance
Image Source: Zacks Investment Research
Is Sysco Corporation a Value Play Stock?
Sysco Corporation currently trades at a forward 12-month P/E ratio of 15.84 compared with the industry average of 14.7. This valuation places the stock at a premium relative to peers, indicating broader market expectations around its business stability and ability to navigate current cost and demand dynamics.
SYY Valuation Picture
Image Source: Zacks Investment Research
Stocks to Consider
The Chefs' Warehouse, Inc. (CHEF - Free Report) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. At present, CHEF flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Chefs' Warehouse’s current fiscal-year sales and earnings implies growth of 10.6% and 33.7%, respectively, from the year-ago reported figures. Chefs' Warehouse delivered a trailing four-quarter earnings surprise of 30.4%, on average.
The Vita Coco Company, Inc. (COCO - Free Report) develops, manufactures, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. COCO currently sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 21.9%, on average.
The Zacks Consensus Estimate for Vita Coco’s current fiscal-year sales and earnings indicates growth of 31.6% and 64.7%, respectively, from the year-ago reported numbers.
Darling Ingredients Inc. (DAR - Free Report) develops, produces and sells sustainable natural ingredients from edible and inedible bio-nutrients in North America, Europe, China, South America and internationally. At present, Darling Ingredients holds a Zacks Rank of 2 (Buy). DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.
The consensus estimate for Darling Ingredients’ current fiscal-year sales and earnings implies growth of 11.5% and 926.5%, respectively, from the year-ago figures.