Critical Analysis: Sysco (SYY) vs. Its Peers

Sysco (NYSE:SYY) is one of 149 publicly-traded companies in the “Consumer Staples Distribution & Retail” industry, but how does it contrast to its peers? We will compare Sysco to related companies based on the strength of its valuation, profitability, analyst recommendations, earnings, dividends, risk and institutional ownership.

Risk & Volatility

Sysco has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500. Comparatively, Sysco’s peers have a beta of 0.43, meaning that their average stock price is 57% less volatile than the S&P 500.

Profitability

This table compares Sysco and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sysco	2.08%	95.05%	8.00%
Sysco Competitors	-25.67%	1.91%	2.62%

Earnings and Valuation

This table compares Sysco and its peers gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Sysco	$84.55 billion	$1.76 billion	22.49
Sysco Competitors	$34.74 billion	$846.03 million	16.25

Sysco has higher revenue and earnings than its peers. Sysco is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Dividends

Sysco pays an annual dividend of $2.20 per share and has a dividend yield of 2.7%. Sysco pays out 60.1% of its earnings in the form of a dividend. As a group, “Consumer Staples Distribution & Retail” companies pay a dividend yield of 3.8% and pay out 36.7% of their earnings in the form of a dividend. Sysco has increased its dividend for 57 consecutive years. Sysco lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Analyst Recommendations

This is a summary of current recommendations and price targets for Sysco and its peers, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sysco	1	6	9	0	2.50
Sysco Competitors	2234	8248	10024	455	2.42

Sysco presently has a consensus price target of $90.42, suggesting a potential upside of 9.86%. As a group, “Consumer Staples Distribution & Retail” companies have a potential upside of 59.97%. Given Sysco’s peers higher probable upside, analysts plainly believe Sysco has less favorable growth aspects than its peers.

Insider & Institutional Ownership

83.4% of Sysco shares are held by institutional investors. Comparatively, 45.0% of shares of all “Consumer Staples Distribution & Retail” companies are held by institutional investors. 0.6% of Sysco shares are held by company insiders. Comparatively, 19.7% of shares of all “Consumer Staples Distribution & Retail” companies are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Sysco beats its peers on 10 of the 15 factors compared.

Sysco Company Profile

Sysco Corporation, through its subsidiaries, engages in the marketing and distribution of various food and related products to the foodservice or food-away-from-home industry in the United States, Canada, the United Kingdom, France, and internationally. It operates through U.S. Foodservice Operations, International Foodservice Operations, SYGMA, and Other segments. The company distributes frozen food, such as meat, seafood, fully prepared entrées, fruits, vegetables, and desserts; canned and dry food products; fresh meat and seafood products; dairy products; beverages; imported specialties; and fresh produce products. It also supplies various non-food items, including paper products comprising disposable napkins, plates, and cups; tableware consisting of glassware and silverware; cookware, such as pots, pans, and utensils; restaurant and kitchen equipment and supplies; and cleaning supplies. The company serves restaurants, hospitals and nursing facilities, schools and colleges, hotels and motels, industrial caterers, and other foodservice venues. Sysco Corporation was incorporated in 1969 and is headquartered in Houston, Texas.