Is Sysco a Great Value Stock Right Now?
June 30, 2021 5 min read  Sysco Corporation (SYY) is one of the prominent players in the food distribution industry. But the company suffered a major setback amid the COVID-19 pandemic as several restaurants, schools and colleges, and other foodservice venues to which it sells its services were forced to close. The Houston, Tex., companys fiscal third quarter financial results were negatively affected by the pandemic. Its revenue for the quarter declined 13.7% year-over-year to $11.82 billion, missing consensus estimates by $202.49 million. The stock's price has declined 6.6% over the past month to close yesterdays trading session at $75.68. However, the stock has gained 39.1% over the past year and 23.7% over the past nine months. And with restaurants and other foodservice venues gradually reopening, SYY is expected to generate solid sales growth in the coming quarters. Given its growth prospects, the stock looks undervalued at its current price level. Its 0.95x and 0.78x respective forward EV/S and P/S are lower than the 2.16x and 1.61x industry averages. Furthermore, SYY announced in March that it has reduced its outstanding debt by $1.1 billion. So, heres what we think could influence SYYs performance in the coming months:  Positive Developments  Last month SYY agreed to acquire Greco and Sons, a leading independent Italian specialty distributor in the United States, from Arbor Investments and the Greco family. The move is expected to help SYY better serve Italian-focused customers by establishing a new cuisine-focused selling platform. The company also added two new online toolkits last monthLabor & Hiring and Summer Solutions Toolkitsto its Foodie Solutions platform. Also, in February, SYY introduced nine innovative concepts through its Cutting Edge Solutions platform, including On-Trend plant-based vegetable pastas, Latin-inspired innovation and labor-saving chicken concepts. Recipe for Growth Strategy  On May 20, SYY unveiled its Recipe for Growth strategy at its 2021 Investor Day. The strategy is designed to help the company grow 1.5 times faster than the market by the end of its fiscal year 2024 via five strategic pillars. In addition, as part of its financial outlook for the coming years, SYY said that it is targeting $750 million in cost reductions for the fiscal year 2021 through fiscal year 2024 period. The companys CFO, Aaron Alt said, The combined actions we are announcing today position Sysco for long-term growth and success.  Favorable Analysts Estimates  Analysts expect SYYs revenue to increase 60.5% for the current quarter, ending June 30, 2021, and 21.8% in its fiscal year 2022. Its EPS is expected to increase 306.9% in the current quarter and 144.1% for the quarter ending September 30, 2021. Moreover, its EPS is expected to grow at a 28.4% rate per annum over the next five years. Wall Street analysts expect the stock to hit $89.50 in the near term, which indicates a potential 18.3% upside. POWR Ratings Reflect Rosy Prospects  SYY has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree. Our proprietary rating system also evaluates each stock based on eight different categories. SYY has a B grade for Growth, consistent with analysts expectations that its revenue and EPS will increase. It has a B grade for Value also, which is in sync with its lower-than-industry valuation ratios. The stock has a B grade for Quality, which is justified given its respective 2.07% and $2.02 billion trailing-12-month asset turnover ratio and cash from operations, which are higher than the 0.85% and $583 million industry averages. Click here to access SYYs ratings for Momentum, Stability, and Sentiment as well. SYY is ranked #5 of 80 stocks in the B-rated Food Makers industry. If youre looking for other top-rated stocks in the same industry, with an Overall POWR Rating of Strong Buy or Buy, you can access them here. Bottom Line  SYY is not only a great value stock currently, but also possesses solid growth attributes. With several restaurants, hospitals, and other foodservice venues gradually returning to their pre-pandemic order volume with the reopening of the economy, we think SYY is well-positioned to generate significant growth in the coming quarters. So, it is wise to bet on the stock now. 7 SEVERELY Undervalued Stocks  9 "Must Own" Growth Stocks for 2021  Stock Market Outlook for 2nd Half of 2021  5 Ways to Beat the S&P 500