Should You Buy It? Sysco

Despite some recent signs of life in the restaurant space, shares of Sysco (SYY - commentary - Cramer's Take) remain a just couple of points up from the March lows, closing Wednesday at $22.13.

The company is the leading food-service supplier in the country, with over 400,000 customers. That said, Sysco is facing a small earnings decline in fiscal 2009 (ending June), following two straight years of double-digit-percentage profit increases.

The company is scheduled to post fiscal third-quarter (ended March) results on May 4. The consensus analyst estimate is for the company to earn 38 cents a share, down from 40 cents a year ago, on $8.96 billion of revenue. Management has exceeded profit expectations in three of the past four quarters.

Ahead of the numbers, Sysco was downgraded by Citigroup on April 20, from buy to hold. Despite the prospect of gaining market share, the analyst cited soft sales across the industry that could lead to higher promotional activity. The company was also downgraded at JPMorgan earlier in the month.

With that in mind, I'm here to answer readers' questions: Should you buy it? Does Sysco offer value at current levels, or will its customers pull back on spending in the coming quarters?

First of all, readers should take note that Sysco is under new leadership. Bill DeLaney took over the CEO position on March 31, from Richard Schneiders, who retired. DeLaney was previously Sysco's CFO, and he has been with the company since 1987. As a result, I do not expect a lot of operating friction as DeLaney transitions into office.

---

David Peltier is a research associate at TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Peltier appreciates your feedback; click here to send him an email.

Interested in more writings from David Peltier? Check out his newsletters, TheStreet.com Dividend Stock Advisor and TheStreet.com Value Investor.