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Sysco Corp SYY

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Economic Moat

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Narrow-Moat Sysco’s Strategic Roadmap Is On-Target, but Shares Are Fully Cooked

Analyst Note

| Rebecca Scheuneman, CFA |

After further digesting Sysco's three-year roadmap, we are increasing our fair value estimate by 18% to $65. We initially expected to boost our valuation at a high single-digit rate, but we think our initial assessment failed to appreciate the operating leverage from the $1.8 billion in new national customer contracts won over the past year, the 13,000 independent restaurants that have been onboarded since the onset of the pandemic, and the incremental business expected from additional market share gains.

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Company Profile

Business Description

Sysco is the largest U.S. food-service distributor, boasting 16% market share of the highly fragmented food-service distribution industry. Sysco distributes over 400,000 food and nonfood products to restaurants (62% of revenue), healthcare facilities (9%), travel and leisure (7%), retail (5%), education and government buildings (8%), and other locations (9%) where individuals consume away-from-home meals. In fiscal 2020, 81% of the firm’s revenue was U.S.-based, with 8% from Canada, 5% from the U.K., 2% from France, and 4% other.

Contact
1390 Enclave Parkway
Houston, TX, 77077-2099
T +1 281 584-1390
Sector Consumer Defensive
Industry Food Distribution
Most Recent Earnings Mar 31, 2021
Fiscal Year End Jun 27, 2021
Stock Type Slow Growth
Employees 57,000

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