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Is Sysco a Great Value Stock Right Now?

Stock MarketsJun 30, 2021 09:30AM ET
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© Reuters. Is Sysco a Great Value Stock Right Now?

Food distribution company Sysco Corporation’s (SYY) unimpressive fiscal third quarter revenue performance caused some investors to rotate away from the stock. However, given the company’s bright near-term prospects with the economy’s reopening, is the stock a value pick at its current price level? Let’s find out. Sysco Corporation (NYSE:SYY) is one of the prominent players in the food distribution industry. But the company suffered a major setback amid the COVID-19 pandemic as several restaurants, schools and colleges, and other foodservice venues to which it sells its services were forced to close. The Houston, Tex., company’s fiscal third quarter financial results were negatively affected by the pandemic. Its revenue for the quarter declined 13.7% year-over-year to $11.82 billion, missing consensus estimates by $202.49 million. The stock's price has declined 6.6% over the past month to close yesterday’s trading session at $75.68.

However, the stock has gained 39.1% over the past year and 23.7% over the past nine months. And with restaurants and other foodservice venues gradually reopening, SYY is expected to generate solid sales growth in the coming quarters.

Given its growth prospects, the stock looks undervalued at its current price level. Its 0.95x and 0.78x respective forward EV/S and P/S are lower than the 2.16x and 1.61x industry averages. Furthermore, SYY announced in March that it has reduced its outstanding debt by $1.1 billion.

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Is Sysco a Great Value Stock Right Now?
 

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