Published on 25 Oct 2022 on Zacks via Yahoo Finance
Sysco's (SYY) Recipe for Growth Bodes Well Amid High Costs
Sysco Corporation SYY has been benefiting from its Recipe for Growth program, which is strengthening the company’s capacities across sales and the supply chain. The company’s diversified business and gains from acquisitions have also been a driver.However, the food company is battling cost inflation like several other industry players.Let’s delve deeper.
Recipe for Growth & Other Drivers
Sysco is progressing well with its Recipe for Growth and invested operating expenses of $67 million in the same in the fourth quarter of fiscal 2022, especially for enhancing the supply chain. The Recipe for Growth program involves five strategic priorities aimed at enabling the company to grow 1.5 times faster than the market by FY24 end.The five strategic pillars include enhancing customers’ experiences via digital tools. In this regard, the company’s Sysco Shop platform and the new pricing software are working well. Further, the company is focused on improving the supply chain to cater to customers efficiently and consistently with better delivery and omnichannel inventory management.Sysco aims at providing customer-oriented merchandising and marketing solutions to augment sales. The company also targets having team-based selling, with an emphasis on important cuisines. Finally, Sysco is focused on cultivating new capacities, channels and segments alongside sponsoring investments via cost-saving initiatives.Sysco is a diversified company, which covers every part of the food away from home market. The company’s operations are diversified across different customer types, product categories and geographies.Sysco caters to restaurants of all price-point spectrums and types. It also caters to health care and education facilities alongside travel and recreation facilities in office buildings. Travel and recreation facilities are seeing a continued revival and are likely to be a growth area in the coming years.Sysco targets growing at 1.35 times the industry in fiscal 2023, which will keep it on track to grow at 1.5 times the industry in fiscal 2024. It expects top-line growth of at least 10% in fiscal 2023, which will help Sysco surpass the annual sales mark of $75 billion for the first time.Management expects acquisitions to contribute to its growth. In fiscal 2023, Sysco envisions adjusted earnings per share (EPS) of $4.09 to $4.39. The midpoint of this range suggests a 30% increase from the adjusted EPS in fiscal 2022. The midpoint of the guidance indicates adjusted EBITDA of about $4 billion.