Ticker (Exchange) – SYY (NYSE) ISIN – US8718291078
Current Price – $77.1 Target Price – $84.6 Upside Potential – 9.7%🔥 Dividend Yield – 2.7%💵 Investment Time– 1 year
Sysco is an American company engaged in the sale, marketing, and distribution of food products to restaurants, medical and educational institutions, as well as hotels. It is a market leader in the U.S. and demonstrates strong financial performance. Additionally, it regularly pays dividends. The fair value of Sysco’s shares is $84.6, with an upside potential of 9.7%. The dividend yield is 2.7%.
Investment Thesis
🔼Strong Financial Performance. For the fiscal year 2024 (Q2 2024), Sysco reported a 4.2% year-over-year increase in revenue to $20.6 billion. Adjusted earnings per share (EPS) grew by 3.7% year-over-year to $1.39. The net cash flow for the entire fiscal year reached $2.2 billion, indicating the capacity to pay dividends. Starting from the next fiscal year, the company plans to implement a 3-year sustainable growth strategy. Sysco forecasts long-term annual growth rates of 4-6% for sales, 6-8% for EPS, and 9-11% for shareholder returns.
🔼Attractive Valuation. The company is valued at 16.8 times its expected annual earnings, which is below the median value for the sector (17.8) and the 5-year average for Sysco itself (25.8). This creates favorable conditions for buying.
🔼Dividends and Buybacks. Sysco is a "Dividend King," having consistently increased its dividend payments for 54 consecutive years. The company also returns profits to shareholders through share buybacks. Over the past year, $2.2 billion was spent on this, with $1 billion allocated to dividends and $1.2 billion to share repurchases. The dividend yield is 2.7%, which is already a good figure. Given the expected decrease in the Fed's key interest rate this fall, shares of such companies will become increasingly attractive.
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Disclaimer
The information provided above is not an investment recommendation and does not guarantee or promise profitability. Before investing, you should assess the potential risks and rewards and determine your willingness and ability to accept such risks.
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