Back to top

Image: Bigstock

Here's What You Should Note Ahead of Sysco (SYY) Q4 Earnings

Read MoreHide Full Article

Sysco Corporation (SYY - Free Report) is scheduled to release fourth-quarter fiscal 2019 results on Aug 12. This food and related products company delivered average positive earnings surprise of nearly 4% in the trailing four quarters.

Let’s see what’s in store for the company this time around.

Sysco Corporation Price and EPS Surprise

Sysco Corporation Price and EPS Surprise

Sysco Corporation price-eps-surprise | Sysco Corporation Quote

What to Expect?

The Zacks Consensus Estimate for earnings in the fourth quarter has been stable over the past 30 days at $1.07, which suggests an increase of 13.8% from the year-ago period’s reported figure. The consensus mark for revenues is $15,556 million, indicating growth of 1.6% from the year-ago quarter’s reported figure.

Factors to Note

Sysco’s fourth-quarter performance is likely to reflect strength in its U.S. Foodservice unit, which has been driving sales for quite some time now. Notably, local case volumes in this segment have been rising year over year for 20 consecutive quarters now. Clearly, a favorable economic scenario marked by a strong labor market will likely boost restaurant sales and the U.S. Foodservice segment’s performance. The company’s results are also expected to gain from various buyouts. Sysco acquired sister firms — J & M Wholesale Meats and Imperio Foods — in April. These are expected to strengthen the company’s distribution network and augment sales.

Sysco’s focus on strategies for 2020 also bodes well for the quarter to be reported. Its core strategies include enhancing consumers’ experience, optimizing business, stimulating the power of its people and achieving operational efficacy. In this regard, the company is focusing on enhancing assortments, making constant innovations, ensuring food safety and revitalizing brands. Such efforts are expected to drive the company’s results in the upcoming release.

Sysco is witnessing cost-related headwinds, as operating expenses in the U.S. Foodservice unit have been rising for a while due to increased supply-chain and labor costs across warehouse and transportation. Persistence of these elevated costs is a threat to margins. Also, Sysco’s International unit continued to deliver a mixed performance in the last reported quarter. While sales were strong in Canada, consumer sentiment in the U.K. continued to be affected by Brexit-related worries.

Although such trends pose concerns for the quarter to be reported, Sysco’s aforementioned growth drivers and cost-containment efforts are likely to help it offset these hurdles.

What the Zacks Model Unveils

Our proven model doesn’t show a beat for Sysco this earnings season. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Sysco carries a Zacks Rank #3, it has an Earnings ESP of 0.00%, which makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Estee Lauder (EL - Free Report) has an Earnings ESP of +2.46% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

General Mills (GIS - Free Report) has an Earnings ESP of +0.87% and a Zacks Rank #2.

Conagra Brands (CAG - Free Report) has an Earnings ESP of +0.42% and a Zacks Rank #3.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>