Sysco Delivers Mixed Q2 Results Hurt By High Operating Expenses

Sysco Corp. (SYY) delivered mixed Fiscal Q2 2022 results. Revenue topped consensus estimates, but earnings missed forecasts due to higher-than-expected operating expenses. SYY shares rose 1.78% to close at $81.34 on February 8.

Sysco is a U.S. company that markets and distributes a range of food and related products. It operates through U.S. Foodservice Operations, International Foodservice Operations, SYGMA, and Other segments.

Sysco Earnings

Second-quarter sales were up 41.2% year-over-year to $16.3 billion, beating consensus estimates of $16.05 billion. According to CEO and President Kevin Hourican, the company gained significant market share due to its supply chain strength and Recipe for Growth strategy.

While diluted earnings per share increased 235.3% year-over-year to $0.57, it still fell short of consensus estimates of $0.71 a share. The miss was fueled by adjusted operating expenses increasing 33.7% year-over-year to $367 million.

According to the Chief Financial Officer, Aaron Alt, Q2 results reflect strong sales growth and increased profitability amid a challenging business environment and inflationary pressures.

During the quarter, Sysco repurchased $416 million worth of common stock. The company also refinanced approximately $1.25 billion of debt at longer maturities. Sysco dividends have increased over the past 13 years leading to a dividend yield of 2.36%.

Stock Rating

Last month, Piper Sandler analyst Nicole Miller Regan reiterated a Buy rating on Sysco stock and cut the price target to $83 from $86, implying 2.04% upside potential to current levels.

Consensus among analysts is a Moderate Buy based on 6 Buys, 3 Holds, and 1 Sell. The average Sysco price target of $87.50 implies 7.57% upside potential to current levels.

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