Sysco Corporation (SYY)

Conclusion

Sysco is a food distributor that supplies restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers, with operations in the United States, Canada, the United Kingdom, France and Sweden. At a price of 78.38 USD on 2026-11-09, the market capitalisation is 38.6 billion USD.

The verdict is fair. The fair value band runs from 71.14 to 106.71 USD with a midpoint of 88.92 USD, giving a margin of safety of 13.5% at the current price. The DCF gives 81.81 USD per share, and the fair value from historical multiples is 96.03 USD. Today's P/E of 21.4 sits below its ten-year median of 24.2, and EV/EBITDA of 11.8 sits below its median of 13.9. The reverse DCF implies growth of 4.4% a year, against revenue growth of 10.5% a year over five years and FCF per share growth of 7.6% a year over the same period.

The strongest numbers are an Altman Z-score of 4.85, a Piotroski score of 7 out of 9, and ROIC of 15.1% against a WACC of 7.5%. The weakest are an operating margin of 3.5% against a ten-year median of 3.75%, net debt to EBITDA of 2.84, and estimate revisions that turned negative, with a current-year change of -0.52% over 90 days and five downward revisions in the last 30 days.

Financial health

Financial strength is green, held up by an Altman Z-score of 4.85 and a current ratio of 1.46, and pulled down only modestly by net debt to EBITDA of 2.84 and interest coverage of 3.93, both assessed neutral. The quick ratio is 0.90 and debt to equity is 3.79, which is high and reflects a thin equity base. The Altman model was designed for manufacturers, and Sysco is a distributor, so the safe zone is an indication rather than a firm verdict. Insolvency risk: low, about 3.6% by the estimate of the Ohlson model, measured as of 2026-06-30.

Earnings quality

Earnings quality is green, supported by a Piotroski score of 7 out of 9, free cash flow conversion of 1.21 on a trailing basis and 1.03 over five years, and a negative accrual ratio of -0.0319. Stock-based compensation is 0.14% of revenue, and free cash flow after it is 2.08 billion USD. The share count fell at a compound rate of 1.3% a year over five years, which reflects buybacks. The Beneish M-score is not available. The company beat earnings expectations in 6 of the last 8 quarters, with an average surprise of 1.05%. Estimate revisions are weaker: the current-year estimate changed by -0.52% over 90 days, with five downward and no upward revisions in the last 30 days, and the next-year estimate changed by -0.19%.

Profitability

Profitability is yellow. Gross margin of 18.5% is in line with its ten-year median of 18.5%, while operating margin of 3.5% sits below its median of 3.75% and net margin of 2.1% is close to its median of 2.2%. ROIC of 15.1% against a WACC of 7.5% gives a ROIC minus WACC of 7.6 percentage points, which the scorecard assesses as good. Return on equity of 44.7% is inflated by leverage. The DuPont split shows a net margin of 2.08%, an asset turnover of 2.98 and an equity multiplier of 10.65, so the high return comes from volume and borrowing rather than from margin. Operating margin stability is 0.22.

Growth

Growth is green. Revenue grew at a compound rate of 3.5% over three years, 10.5% over five years and 5.3% over ten years. Earnings per share grew at 1.7% over three years, 29.1% over five years and 8.3% over ten years. Revenue rose in 8 of the last 10 years. The three-year pace is clearly slower than the five-year pace, and the next-year earnings growth estimate is 5.85%, so the recent trend is more modest than the long-run record.

Valuation

Valuation is yellow. Today's multiples are below their ten-year medians: P/E is 21.4 against 24.2 (a premium of -11.6%), EV/EBITDA is 11.8 against 13.9 (-14.6%), price to free cash flow is 17.6 against 23.4 (-24.9%), price to sales is 0.45 against 0.54 (-16.2%), and price to book is 9.5 against 19.2 (-50.3%). The DCF gives 81.81 USD per share, using a discount rate of 8.9%, first-stage growth of 5.85% and terminal growth of 2.5%; the terminal value accounts for 56.6% of that figure. The reverse DCF implies growth of 4.4%, against five-year revenue growth of 10.5% and five-year FCF per share growth of 7.6%. The dividend yield is 2.7%, the forward yield is 2.9%, and the payout on free cash flow is 47.5%. The fair value band is built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target.

Risks

The thin operating margin of 3.5% leaves little room for cost pressure in food distribution. A fall in earnings would push net debt to EBITDA of 2.84 and interest coverage of 3.93 toward weaker levels, and debt to equity of 3.79 shows how much the balance sheet relies on borrowing. Negative estimate revisions suggest analysts expect the current year to come in weaker, which would reduce the earnings base behind the multiples. The Beneish M-score is not available, so manipulation risk in the reported earnings cannot be screened on that measure. The analysis also lacks a debt maturity schedule and revenue by segment, so refinancing risk and the contribution of each business line cannot be assessed.