Sysco Earns 51 Cents Per Share

The last of our stocks reported earnings for this earning season. Before the bell, Sysco (SYY) said it earned 51 cents per share which matched Wall Street’s expectations. Thanks to food inflation, Sysco’s revenues rose 7.4% to 9.75 billion which beat consensus by $20 million.

From the company’s press release:

“I am pleased with the volume growth and productivity improvements our operating companies produced during the quarter,” said Bill DeLaney, Sysco’s president and chief executive officer. “While our overall sales increase and operating expense management were encouraging, we missed our goal for operating income growth, largely due to a decline in gross profit margin and higher pension costs. Our entire leadership team is focused on effectively leveraging sales growth as the fiscal year progresses.”

This is slightly disappointing, but it’s still an improvement over last earnings season when Sysco missed by a penny per share. This is still a decent stock and I expect a small dividend increase soon.

Here’s what I wrote over the summer:

If you’re looking for a decent bargain, shares of Sysco (SYY) look pretty good now that they’re under $29. Thanks to the market’s recent unpleasantness, the stock has gotten as low as $28.46.

Sysco is a conservative company. They pay a 25-cent quarterly dividend, so the current yield is about 3.5% which is well above the 10-year T-bond yield.

Sysco’s business had been feeling the squeeze of lower prices. The company saw three straight quarters of declining earnings (not a lot, but declining). They responded by cutting overhead and their earnings started to perk up. Last quarter was interesting because it was the first time since 2008 that sales also grew. That’s very good news because you can’t cut overhead forever; you need to start growing your sales.

Sysco has now beaten earnings for four straight quarters. Sysco reports late, so the next earnings report probably won’t come out until around August 10. Plus, Sysco’s fiscal year ends on June 30 so this upcoming report will be for their fiscal fourth quarter.

The company will probably earn around 60 cents per share, give or take, which comes out to $1.96 for the year. At $29 per share, that’s not bad. I don’t expect Sysco to grow its earnings by a lot for their next fiscal year, but they almost certainly should be higher than last year.

Sysco is a buy any time it’s below $30. Below $28 would be much better.

Here’s a final summary of earnings for our Buy List:

Company Ticker Symbol Earnings Date Estimated EPS Reported EPS
Intel INTC 12-Oct $0.50 $0.52
Gilead GILD 19-Oct $0.87 $0.90
Johnson & Johnson JNJ 19-Oct $1.15 $1.23
Stryker SYK 19-Oct $0.77 $0.80
SEI Investments SEIC 20-Oct $0.26 $0.30
Baxter BAX 21-Oct $0.97 $1.01
Eli Lilly LLY 21-Oct $1.15 $1.21
Reynolds American RAI 21-Oct $1.34 $1.35
Fiserv FISV 26-Oct $1.00 $1.04
AFLAC AFL 26-Oct $1.39 $1.45
Nicholas Financial NICK 28-Oct $0.30 $0.33
Moog MOG-A 4-Nov $0.70 $0.71
Wright Express WXS 4-Nov $0.68 $0.72
Becton Dickinson BDX 4-Nov $1.25 $1.31
Sysco SYY 8-Nov $0.51 $0.51

Posted by on November 8th, 2010 at 10:17 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.