Sysco Corporation (SYY): what the price requires
At today's price, Sysco Corporation (SYY) is priced for -4.2% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/SYY
Headline
| Field | Value |
|---|---|
| Ticker | SYY |
| Company | Sysco Corporation |
| Sector / Industry | Consumer Defensive |
| Current price | $83.58/sh |
| Composition | Fresh and frozen meats 19% / Canned and dry products 18% / Frozen fruits, vegetables, bakery and other 15% / Dairy products 11% / Poultry 10% / Fresh produce 8% / Paper and disposables 7% / Beverage products 4% / Seafood 3% / Equipment and smallwares 2% / Other 3% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin today | 3.4% |
| Implied growth | -4.2% |
| Multiple paid | 19x operating income |
Solve inputs: computed at a 6.6% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.2pp.
Reconcile: at the x-ray's 9.3% required return this reads ~15.1%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.61σ |
| cohort percentile (of 69 peers) | 52 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.71x | 4 | expensive |
| Earnings | 3.99x | 4 | expensive |
| Relative | 0.93x | 3 | justifies |
| Growth | 1.38x | 4 | expensive |
Families that justify the price: Relative Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.8%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $60.07 | 1.39x | yes | FCF base $1.8B, growth 3% (input: historical growth), terminal g 3.4%, WACC 7.8%, 5yr projection |
| DCF Exit Multiple | Growth | $75.43 | 1.11x | yes | Exit EV/EBITDA: 11.3x / 13.3x / 15.3x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $85.81 | 0.97x | yes | P/E 22x (static sector reference · 2026-04), scenarios: 18.5x / 22.0x / 25.5x (bear / base = reference held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $22.69 | 3.68x | yes | Stage 1: -8% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $39.00 | 2.14x | yes | BV/sh $4.77, ROE (TTM) 75.6%, ke 9.3% |
| Two-Stage Excess Return | Asset | $178.77 | 0.47x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $60.66 | 1.38x | yes | Rev $83.6B, growth 3% (input: historical growth; tapered), Terminal P/S: 0.4x / 0.5x / 0.6x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $32.99 | 2.53x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $2.89B × (1−24%) / WACC 7.8% → EPV (no growth) |
| Residual Income | Asset | $64.97 | 1.29x | yes | BV $4.77 + 5yr PV of (ROE (TTM) 75.6% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $19.69 | 4.24x | yes | √(22.5 × EPS $3.61 × BVPS $4.77) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $89.56 | 0.93x | yes | EBITDA $3.96B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $15.37 | 5.44x | yes | FCF $1821.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $12.81 | 6.52x | yes | SBC-adj FCF $1.71B (FCF $1.82B − SBC $0.11B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $3.03 | 27.58x | yes | EPS $3.61 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $1.98 | 42.21x | yes | BV $4.77 × (ROIC 3.2% / WACC 7.8%) (excluded from median) |
| P/Sales Sector | Relative | $347.33 | 0.24x | yes | Revenue $83.57B × sector P/S 2.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $39.03 | 2.14x | yes | EPS $3.61 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $12.1b |
| Net debt / NOPAT (after-tax) | 5.67x |
| Net debt / operating income (pre-tax) | 4.33x |
| Share count CAGR (buyback) | -1.6% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Sysco distributes food to restaurants at continental scale, serving what its 10-K estimates as "about 17% of an approximately $370 billion annual foodservice" market (accession 0000096021-25-000099), and just made the largest move in its history: a $29.1 billion agreement to acquire cash-and-carry leader Jetro Restaurant Depot.
- The deal is the risk as much as the opportunity: $21.6 billion of cash consideration lands on a balance sheet already carrying $12.1 billion of net debt at about 4 times trailing operating income, in a 3.6%-margin business tied to restaurant traffic.
- Watch the Hart-Scott-Rodino review with closing expected by the third quarter of fiscal 2027, and the operating momentum underneath: US local case volume grew 3.3% last quarter, the best in three years, with the dividend raised 6% to $0.55 quarterly.
Bull Case
Follow the cash and the intent becomes clear. Sysco pays out roughly $1 billion a year in dividends and just raised the quarterly rate 6% to $0.55 for the coming fiscal year, has shrunk its share count about 1.6% annually for four years, and in March committed to the boldest deployment in its history: acquiring Jetro Restaurant Depot, the leading US cash-and-carry food wholesaler, for approximately $29.1 billion in enterprise value, $21.6 billion of it in cash plus 91.5 million Sysco shares. This is a management team that returns capital on schedule and, when it swings, swings at the one channel it never owned. Restaurant Depot's 166 warehouse stores serve more than 725,000 independent restaurants and small operators, precisely the customers who buy from a truck one week and a warehouse aisle the next; owning both sides of that trip closes the leak in Sysco's share of the independent wallet.
The base business is compounding quietly underneath. Third-quarter sales rose 4.7% to $20.5 billion, US local case volume grew 3.3%, the strongest quarter in three years, and management guided fiscal 2026 net sales to $84 to $85 billion while lifting adjusted EPS expectations to the high end of the range. Scale is the moat, and it is disclosed rather than asserted: the 10-K estimates Sysco serves "about 17% of an approximately $370 billion annual foodservice" market (accession 0000096021-25-000099), with a footprint spanning US broadline, international operations in the "United Kingdom (U.K.), France, Ireland and Sweden", and the SYGMA network serving "quick-service chain restaurant customer locations" (same accession). Seventeen percent of a fragmented market means decades of share runway against smaller distributors who, per the same filing, must form purchasing cooperatives just to approximate Sysco's buying power.
Add the pieces and the bull case is a compounding machine acquiring its complement. The market pays about 19 times operating income for this, a multiple in the lower half of the peer range that embeds a modest operating decline rather than growth. A company guiding to record sales, posting its best local volumes in years, raising its dividend for the coming year, and buying the channel leader next door is not describing a declining business, which is the mispricing the bull is paid to hold.
Bear Case
Foodservice distribution earns its keep at the mercy of the dining-out cycle, and Sysco's own risk factors describe the transmission mechanism: "food cost and fuel cost inflation can lead to reductions in the frequency of dining out", while trade policy and macro shifts "can depress demand... impact consumer confidence and foot traffic to restaurants" (accession 0000096021-25-000099). A 3.6% operating margin means the company keeps about three and a half cents of every sales dollar; small swings in traffic, fuel, or food inflation move a large share of the profit pool. Last quarter's 3.3% local volume growth is genuinely the best in three years, which cuts both ways: the comparison base was that weak because independent restaurant demand spent years soft, and a late-cycle consumer with rising menu prices is the standing threat to the run rate.
Competition grinds at the margin even in good quarters. The filing concedes that new competitive sources "may result in margin erosion" through pricing pressure and discounting, and separately flags "the risk that competition in our industry and the impact of GPOs may adversely impact our margins and our ability to retain customers" (accession 0000096021-25-000099). US Foods and Performance Food Group consolidate the same customer base, group purchasing organizations compress pricing from the demand side, and warehouse clubs attack from below, the very channel dynamic that makes Restaurant Depot attractive is the one that has been siphoning Sysco's independent customers.
Which brings the bear to the deal itself. The Jetro acquisition prices at approximately $29.1 billion, about 14.6 times the target's operating income, with $21.6 billion in cash to be financed, onto a balance sheet that already carries $12.1 billion of net debt at roughly 4 times trailing operating income. Post-close leverage will be the highest in the company's modern history, in a business with three-and-a-half-cent margins, during a consumer cycle of uncertain vintage, with an HSR review still ahead and 91.5 million new shares diluting existing holders. The valuation methods already flag the tension: capitalized earnings power and free cash flow reads sit far below today's price because $1.8 billion of trailing free cash flow is thin support for a $52 billion enterprise value before the deal debt arrives. If integration stumbles or restaurant traffic rolls over mid-financing, the dividend-and-buyback machine the stock's owners bought will find itself competing with a very large interest bill.
Valuation
The price asks very little, which is itself the finding. At about 19 times operating income, today's $83.83 implies company-wide operating profit shrinking around 3.5% a year for five years, a bar the company is currently clearing by a wide margin with sales growing 4.7%. The multiple sits in the lower half of the peer range. The method families tell a split story: peer multiples land essentially at the price, with an EV/EBITDA read at the sector's 14 times slightly above it and the sector earnings multiple even, while the earnings-power family lands far below, because capitalized free cash flow of $1.8 billion cannot by itself support a $40 billion equity claim without growth. The asset reads are noisy for a distributor that runs on $4.77 of book value per share, a structure where nearly all the capital is working capital and leases rather than equity. The honest summary: the market prices Sysco as a stable, modestly-levered cash machine at sector-average multiples, with no premium for the volume inflection or the pending transformation.
The transformation is the open variable on both sides of the ledger. The Jetro Restaurant Depot agreement, roughly $29.1 billion of enterprise value at about 14.6 times the target's operating income, paid with $21.6 billion of cash and 91.5 million shares, will re-lever a balance sheet currently at $12.1 billion of net debt, about 4 times trailing pre-tax operating income, with $1.9 billion of liquid assets. The strategic logic rests on scale the 10-K quantifies, "about 17% of an approximately $370 billion annual foodservice" market today (accession 0000096021-25-000099), extended into the cash-and-carry channel where the same filing acknowledges competitors "can create purchasing cooperatives and marketing groups to enhance their competitive abilities" (same accession). Until closing, the shape of the financing, and what it does to the dividend-plus-buyback capacity that currently returns about $1 billion a year with a 6% raise approved, is the number that decides whether today's undemanding multiple was an opportunity or a fair warning.
Catalysts
The Jetro Restaurant Depot transaction sets the agenda through next year. Announced March 30, 2026 at approximately $29.1 billion in enterprise value, $21.6 billion in cash plus 91.5 million Sysco shares, the deal is expected to close by the third quarter of Sysco's fiscal 2027, subject to Hart-Scott-Rodino clearance. The antitrust review of a combination between the largest broadline distributor and the largest cash-and-carry wholesaler is the single biggest event risk on the calendar; alongside it, watch the debt financing announcements that fund the cash consideration, which will define the pro forma leverage and the durability of the capital-return program.
The operating cadence continues through the deal window. Fourth-quarter and full-year results, due on the company's usual late-July to early-August schedule, test the raised guidance: fiscal 2026 net sales of $84 to $85 billion with adjusted EPS at the high end of the prior range. The metric with the most information content is US local case volume, which grew 3.3% last quarter, the best in three years; sustained local growth validates both the base business and the strategic rationale for owning Restaurant Depot's 725,000-customer channel. Shareholders have one dated certainty already banked: the quarterly dividend rises 6% to $0.55 per share for the fiscal year ending June 2027, continuing a payout that currently returns about $1 billion annually.
Peer Cohorts (Per Segment, With Filing Citations)
U.S. Foodservice Operations / SYGMA (reported)
- USFD (US FOODS HOLDING CORP.)
- (no filing in the citation store)
- PFGC (Performance Food Group Company)
- (no filing in the citation store)
- CHEF (CHEFS’ WAREHOUSE, INC.)
- (no filing in the citation store)
- UNFI (UNITED NATURAL FOODS, INC.)
- (no filing in the citation store)
International Foodservice Operations (reported)
- USFD (US FOODS HOLDING CORP.)
- (no filing in the citation store)
- PFGC (Performance Food Group Company)
- (no filing in the citation store)
- UNFI (UNITED NATURAL FOODS, INC.)
- (no filing in the citation store)
- KR (KROGER CO)
- (no filing in the citation store)
- ACI (Albertsons Companies, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
merger announcement, March 2026 · Q3 FY2026 earnings call, April 2026