April 4, 2018

SYY – Market expectations are for record-high Uniform ROA, but management has concerns about costs, growth, and technology


      • Sysco Corporation (SYY:USA)currently trades near historical averages relative to UAFRS-based (Uniform) Earnings, with a 22.5x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about costs, growth, and technology
      • Specifically, management is confident that they experienced acute inflation of 6% during the second quarter, leading to higher overall product costs in the U.K., and that they are paying higher rates on inbound freight. Furthermore, they may lack confidence in their ability to deliver disciplined profitable growth going forward, and may be downplaying concerns about their U.S. Foodservice operations. Moreover, they may be downplaying concerns about their redesigned website, and may have concerns about the sustainability of growth in their CMU business
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