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Sysco Corporation

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Sysco beats earnings in the second quarter of fiscal 2016. Earnings increased 17.1% year over year, owing to marginal growth in sales and improved gross margin. Revenues missed the consensus mark and also grew marginally on a year-over-year basis, as volume growth was offset by unfavorable currency. We note that the company’s sales have improved consistently driven by acquisitions and volume growth. The company’s growth strategy is also paying off. Its efforts to boost sales and margins are bearing fruits, as the company has delivered positive gross margins in the last three consecutive quarters, after consistently declining since the last two fiscal years. However, currency headwinds and continued food cost deflation remains a concern.

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