SYY changes
Pick any two versions below to diff them.
- Price
- $82.37 → $76.94(−6.6%)
- Discount category
- Close to intrinsic value → Below intrinsic value
- Next earnings
- Nov 3, 2026 → Feb 3, 2027
- Next earnings is estimate
- No → Yes
- About
- Sysco is the largest foodservice distributor in the world. It buys food and non-food products from thousands of suppliers and delivers them to about 670,000 customer locations from 333 distribution facilities. Restaurants give about 59% of sales; hospitals, schools, government, hotels and other customers give the rest. US Foodservice gives about 70% of sales, International about 19% and SYGMA, which serves restaurant chains, about 10%. Sysco makes money from a small margin on a very large volume, and it earns more on local, independent restaurants and on its own Sysco Brand products than on national chains. Sales in the fiscal year to June 27, 2026 were $84.6 billion, and operating income was $3.1 billion. Sysco has agreed to buy Jetro Restaurant Depot, which runs removed: 166 added: 170 cash and carry warehouse stores for independent restaurants in 35 states.
- Thesis
- The market prices Sysco lower because of the size and the debt of the Jetro Restaurant Depot purchase. Sysco will pay $21.6 billion in cash and 91.5 million shares, a total value of about $29.1 billion. It will borrow about $21 billion, and it paused its share buybacks until it reduces debt. S&P and Fitch have a negative outlook on Sysco's BBB rating, and Moody's has its Baa2 rating under review. The Federal Trade Commission asked for more information on the deal on May 27, 2026, which can delay it. Investors also doubt that a distributor with a small margin can run large warehouse stores well. For the gap to close, four things must be true. The FTC must clear the deal, and the deal must close by the third quarter of Sysco's fiscal year 2027, that is, by about March 2027. Sysco must keep its fiscal 2027 outlook of 6% to 7% sales growth and 9% to 11% adjusted EPS growth, with about 2.5% local case growth in the US. After closing, it must reach the $250 million of yearly cost savings in three years and reduce net leverage by at least 1.0 times within 24 months. removed: The first test is added: In the Q1 report on November 3, removed: 2026. added: 2026, US local case volume grew 2.7%, and Sysco kept its EPS outlook and its closing target. But it now expects sales growth at the low end of its range, because food cost inflation is low. The next tests are the FTC decision and the Q2 report, expected in early February 2027. If the deal closes on time and leverage falls on plan, the gap can close over the next four to eight quarters. The main risk is that the FTC blocks the deal or forces Sysco to sell stores.
- Risks
- The FTC has asked for more information on the Jetro Restaurant Depot deal. The FTC or a state can try to block it or ask Sysco to sell assets. If the deal does not removed: close, added: close because of the regulators or the termination date, Sysco must added: pay a termination fee of $1.164 billion and redeem most of the new removed: notes and pay fees for nothing. added: notes. The deal adds about $21 billion of debt. S&P and Fitch have a negative outlook on Sysco's BBB rating, and Moody's has the Baa2 rating under review. Sysco paused share buybacks. If profit grows slower than planned, debt falls slower and a rating cut can raise interest costs. Sysco has never run cash and carry warehouse stores. The planned $250 million of yearly savings and the plan to open more than 125 new stores over at least 20 years depend on a good integration of a business with its own culture and systems. Restaurants give about 59% of sales. If consumers eat out less, local restaurant volume, which gives Sysco its best margins, can fall. US local case volume fell 1.4% in fiscal year 2025 before it grew again in fiscal year 2026. removed: Sysco has an interim CFO, Brandon Sewell. A change added: Low food cost inflation lowers sales growth. Product cost inflation was only 0.3% in added: Q1 of fiscal year 2027, and Sysco now expects sales growth at the removed: finance team during a large integration adds execution risk. added: low end of its 6% to 7% range.
- Balance sheet
- Cash: removed: $1.8B added: $3.2B Debt: removed: $13.5B added: $13.8B Net debt: removed: $11.7B added: $10.6B EBITDA, last 12 months: $4.0B Net debt / EBITDA: removed: 2.9× added: 2.7× (medium) Interest cover: 4.3× Debt due within 12 months: removed: $1.2B added: $960M Ratings: Moody's Baa2, S&P BBB (negative outlook), Fitch BBB (negative outlook) Sysco funds itself with unsecured senior notes guaranteed by its US Broadline subsidiaries, commercial paper and a $3.0 billion revolving credit facility. At removed: June 27, added: September 26, 2026, added: cash was $3.17 billion and debt was removed: $13.5 added: $13.82 billion, including removed: finance leases. At August 4, 2026, commercial added: $960 million due within 12 months. Commercial paper was removed: $700 added: $375 million in removed: the US added: Europe and removed: $663 million added: nothing in removed: Europe, added: the US, and nothing was drawn on the revolving credit facility. added: Sysco gave net debt of about 2.4 times adjusted EBITDA added: at that date. This debt includes the C$1.5 billion of notes sold on September 25, 2026, but not the notes sold in October. On October 6, 2026, Sysco sold $10.75 billion of senior notes, $3.9 billion of junior subordinated notes and 1.0 billion euros of junior subordinated notes. With these notes and the $967 million share sale of September 2026, Sysco completed the financing of the cash price of Jetro Restaurant Depot, and it ended the bridge loan commitment on October 8, 2026. Sysco expects about $787 million of interest expense on the new notes for the rest of fiscal year 2027. EBITDA is Sysco's EBITDA for fiscal year 2026, and interest cover is operating income divided by interest expense for the same year. removed: A $1.0 billion note matured on July 15, 2026. The revolving credit removed: facility, signed on April 16, 2026, added: facility ends in April 2031 and grows to $4.0 billion after the deal closes. removed: The balance sheet does not yet show the deal financing. In 2026, Sysco removed: signed a $3.0 billion delayed-draw term loan. From September 2026, it raised $14.65 billion of new US dollar notes, 1.0 billion euros of junior subordinated notes, C$1.5 billion of notes and about $1.0 billion of new shares. These replace most of the $22 billion bridge loan commitment of March 30, 2026. Sysco aims to cut net leverage by at least 1.0 times in the first 24 months after closing and has a long-term target of about 2.75 times. The ratings are from the 10-K, as of August 4, 2026. As of removed: Jun 27, added: Sep 26, 2026.
- Checkpoints
- Nov 3, 2026: Q1 fiscal 2027 results: local volume and deal timing. removed: Pending. added: Passed. Watch: US local case growth near 2.5%, a kept fiscal 2027 outlook and no new delay of the deal pass; a lower outlook or a later closing date fails. added: Outcome: US local case volume grew 2.7%, Sysco kept its 6% to 7% sales and 9% to 11% adjusted EPS growth outlook, though with sales now at the low end, and it still expects to close the deal by the third fiscal quarter. Feb 3, 2027 (estimate): Q2 fiscal 2027 results: local volume and deal closing. Pending. Watch: US local case growth near 2.5%, a kept adjusted EPS outlook and a deal on track to close by about March 2027 pass; a lower EPS outlook or a later closing date fails. Q1 2027 (estimate): FTC decision and closing of Jetro Restaurant Depot. Pending. Watch: Clearance without large store sales and closing by about March 2027 pass; an FTC suit or large forced sales fail. 2028 (estimate): Net leverage down by 1.0 times after closing. Pending. Watch: Net leverage at least 1.0 times lower within 24 months after closing and stable investment-grade ratings pass; a rating cut fails.
- Recent events
- added: Nov 3, 2026: Sysco reported Q1 results for fiscal year 2027, which ended September 26, 2026. Sales grew 2.8% to $21.7 billion, and US local case volume grew 2.7%. EPS grew 10.1% to $1.09, and adjusted EPS grew 3.5% to $1.19. Sysco kept its outlook of 9% to 11% adjusted EPS growth for fiscal year 2027, but it now expects sales growth at the low end of its 6% to 7% range, because food cost inflation is lower. It still expects to close the Jetro Restaurant Depot deal by the third quarter of fiscal year 2027. Nov 3, 2026: Sysco made Brandon Sewell, its interim CFO since March 6, 2026, its Chief Financial Officer from November 1, 2026. Oct 13, 2026: Sysco said that it will report Q1 results for fiscal year 2027 on November 3, 2026. Oct added: 8, 2026: Sysco ended its bridge loan commitment, which was then $19 billion, because it had completed the bond and share financing for the cash price of Jetro Restaurant Depot. Oct 6, 2026: Sysco closed the sale of $10.75 billion of senior notes, $3.9 billion of US dollar junior subordinated notes and 1.0 billion euros of junior subordinated notes to pay for Jetro Restaurant Depot. If the deal does not close, Sysco must redeem most of these notes. It also sold C$1.5 billion of senior notes on September 25, 2026. Sep 16, 2026: Sysco sold 12.3 million new shares at $81.00 per share, for net proceeds of about $967 million, to pay part of the cash price of Jetro Restaurant Depot. Aug 20, 2026: Sysco added two directors with experience in AI, supply chains and foodservice, and changed its Technology Committee into an AI Transformation and Technology Committee. It said that AI tools give part of the $100 million of cost savings planned for fiscal year 2027. Aug 4, 2026: Sysco reported results for fiscal year 2026, which ended June 27, 2026. Sales grew 3.9%, and adjusted EPS grew 3.4% to $4.61. In Q4, US local case volume grew 2.6%. For fiscal year 2027, which has 53 weeks, Sysco expects sales growth of 6% to 7% and adjusted EPS growth of 9% to 11%. May 27, 2026: The Federal Trade Commission sent Sysco and Jetro Restaurant Depot a second request for information on the deal. This extends the antitrust waiting period until 30 days after both companies comply. Apr 28, 2026: Sysco reported Q3 results for fiscal year 2026. Sales grew 4.7%, and US local case volume grew 3.3%. Adjusted EPS fell 2.1% to $0.94 because of higher incentive pay.