Tags: SYY | Sysco | food | stocks

Sysco Beats Street with a Time-tested Staple

By Forrest Jones   |   Thursday, 02 Jun 2011 02:33 PM

The food might be so-so compared to home cooking, but there’s money to be made in cafeterias. Sysco (SYY) provides food to schools, restaurants, hospitals, movie theaters, summer camps, and hotels. Sales hit $9.8 billion during the third quarter of fiscal 2011, up 9.1 percent from $8.9 billion in the third quarter of fiscal 2010.

Net earnings for the third quarter were $258 million, an increase of $11 million, or 4.4 percent compared to the prior year. Diluted earnings per share EPS came to 44 cents during the quarter, beating many Wall Street forecasts.

Business is sound despite rising food and transportation costs. "We are pleased with our improved performance in the third quarter as both sales and earnings grew over the prior year. Particularly encouraging is our case volume growth in the midst of ongoing product inflation and a sluggish economic recovery," says Sysco President and CEO Bill DeLaney.

"Our leadership team remains highly focused on supporting our customers and improving productivity in all aspects of our business." The company is expanding. It just acquired for an undisclosed sum Goldberg & Solovy Foods, a southern California distributor.

Beat the street

Analysts are happy with the company’s numbers and acquisitions. “Sysco is your quintessential consumer-staples stock. The company is one the largest food services firms in the country, which means its business isn’t heavily impacted by the gyrations of the economy,” says Eddy Elfenbein, an independent analyst who blogs at Crossing Wall Street. “I also like that Sysco’s dividend currently yields 3.25 percent. That’s a good deal. I now rate Sysco a buy up to $32 per share,”

Shares are currently trading just shy of that recommendation. Sysco reported earnings of 44 cents a share, Wall Street was expecting 41 cents a share. Elfenbein had predicted 43 cents.

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The food might be so-so compared to home cooking, but there s money to be made in cafeterias. Sysco (SYY) provides food to schools, restaurants, hospitals, movie theaters, summer camps, and hotels. Sales hit $9.8 billion during the third quarter of fiscal 2011, up 9.1...
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