SYY Fair Value Estimate
$448.17505.2% undervalued
Blended fair value estimate based on DCF, Graham Number, and earnings-based models.
Sysco Corp
Exchange: NYSESector: Consumer DefensiveIndustry: Food Distribution
Sysco Corporation (Sysco), along with its subsidiaries and divisions, is a North American distributor of food and related products primarily to the foodservice or food-away-from-home industry. The Company provides products and related services to approximately 425,000 customers, including restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. Sysco provides food and related products to the foodservice or food-away-from-home industry. The Company has aggregated its operating companies into a number of segments, of which only Broadline and SYGMA are the main segments. Broadline operating companies distribute a line of food products and a variety of non-food products to their customers. SYGMA operating companies distribute a line of food products and a variety of non-food products to chain restaurant customer locations. On October 3, 2012, the Company acquired Keelings Foods.
Did you know?
Profit margin stands at 2.1%.
Current Price
$74.05
-0.88%GoodMoat Value
$448.17
505.2% undervaluedProfile
Valuation (TTM)
Market Cap$35.46B
P/E20.43
EV$52.82B
P/B19.38
Shares Out478.93M
P/Sales0.42
Revenue$83.57B
EV/EBITDA12.05
Sysco Corp (SYY) Valuation
GoodMoat Analysis
The current price appears deeply undervalued relative to the GoodMoat Target, implying a significant margin of safety. However, the high P/E and Debt/Equity ratio, combined with low growth, suggest the market is pricing in significant risks, making the valuation context challenging for a value investor.
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The GoodMoat Target of $441.10 suggests the stock is deeply undervalued at $82.39, representing a theoretical margin of safety of over 81%. According to the GoodMoat Investment Framework, a margin of safety greater than 40% is considered 'Deeply Undervalued,' placing Sysco in this most favourable band. However, this extreme discrepancy requires scrutiny of the underlying valuation multiples. The forward P/E of 22.1x is high for a company with only 3.0% YoY revenue growth, and it is elevated compared to typical value stock profiles. The Debt/Equity ratio of 7.9 is extremely high, indicating a leveraged balance sheet that significantly impacts equity-based metrics like the ROE of 98.2%. While the 4.6% FCF Yield is attractive, the combination of high leverage, low growth, and a premium earnings multiple suggests the market views the business quality as low, which may explain the depressed price relative to the target. For a value investor, the stock appears statistically cheap based on the target but expensive based on its current fundamentals and growth profile, creating a complex valuation picture that hinges on the credibility of the long-term target price. Analysis based on data as of 2024-05-15.
SYY Valuation Metrics
FCF$1.82B
FCF Growth Rate0.74%
EPS Growth (CAGR)1.47%
WACC10.00%
Fair Value Models
Graham Number, PEG-based, and Earnings-based models
View Fair Value →SYY Valuation & Fair Value Analysis
Sysco Corp (SYY) valuation analysis using multiple fair value methodologies. GoodMoat calculates a blended fair value target using discounted cash flow (DCF) analysis, the Graham Number, and earnings-based valuation models.
The GoodMoat Fair Value target for Sysco Corp is $448.17. The current stock price is $74.05, suggesting the stock is 505.2% undervalued.
The price-to-earnings (P/E) ratio is 20.43. Price-to-book ratio is 19.38. Price-to-sales ratio is 0.42. Enterprise value to EBITDA is 12.05. PEG ratio is -1.52.
GoodMoat's valuation models include the Graham Number (based on EPS and book value), an earnings-based model (discounted future EPS), and a PEG-adjusted valuation. The three models are averaged to produce a blended fair value estimate. Use these tools alongside the DCF calculator and reverse DCF to form a comprehensive view of Sysco Corp's intrinsic value.