Back to top

Image: Bigstock

Here's What You Should Note Ahead of Sysco (SYY) Q2 Earnings

Read MoreHide Full Article

Sysco Corporation (SYY - Free Report) is slated to report second-quarter fiscal 2020 results on Feb 3. This provider of food and related products delivered a positive earnings surprise of 5.2%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for second-quarter earnings has been stable at 84 cents per share over the past 30 days. This suggests an increase of 12% from the year-ago period’s reported figure. The consensus mark for revenues stands at $15,092 million, indicating a rise of 2.2% from the figure reported in the year-ago period.

Sysco Corporation Price, Consensus and EPS Surprise

Sysco Corporation Price, Consensus and EPS Surprise

Sysco Corporation price-consensus-eps-surprise-chart | Sysco Corporation Quote

Key Factors to Note

Sysco has been gaining from continued strength in its U.S. Foodservice segment, wherein local case volumes have been rising year over year for more than five years now. Notably, a favorable economic scenario marked by a strong labor market is likely to have worked in favor of restaurant sales.

Further, Sysco’s focus on core strategies — enhancing consumers’ experience, optimizing business, stimulating the power of its people and achieving operational efficacy — has been yielding results. In this regard, the company focuses on enhancing assortments, making constant innovation, ensuring food safety and revitalizing brands. Apart from this, Sysco has been benefiting from its concentration on buyouts to expand the distribution network and the customer base. In this regard, the most recent evidences include Sysco’s buyout of J. Kings Food Service Professionals and the takeover of sister firms J & M Wholesale Meats and Imperio Foods. Both acquisitions were concluded in 2019.

We also commend the company’s cost-saving strategies, like the Finance Transformation Roadmap and Smart Spending initiatives, amid cost-related headwinds. Incidentally, Sysco has been encountering food cost inflation in its U.S. Broadline business for a while. Further, volatile currency movements have been a concern. Additionally, the company has been battling challenges in the International segment. In the last reported quarter, performance in France continued being hurt by operational and supply-chain integration endeavors related to Brake France and Davigel. In its last earnings call, management stated that it expects such challenges throughout fiscal 2020, which raises concerns over the quarter under review.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Sysco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Although Sysco carries a Zacks Rank #2, its Earnings ESP of 0.00% makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Campbell Soup CPB presently has an Earnings ESP of +3.34% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hain Celestial HAIN currently has an Earnings ESP of +5.26% and a Zacks Rank #2.

Kraft Heinz KHC currently has an Earnings ESP of +1.33% and a Zacks Rank #3.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.

This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.

See their latest picks free >>

Go Deeper With Exclusive Zacks Research

Normally $25 each - click below to receive one report FREE:

Sysco Corporation (SYY) - free report >>