Sysco Corporation Stock Buy Recommendation Reiterated (SYY)

NEW YORK ( TheStreet) -- Sysco Corporation (NYSE: SYY) has been reiterated by TheStreet Ratings as a buy with a ratings score of A-. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • SYY's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 4.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has remained constant at $372.62 million with no significant change when compared to the same quarter last year. In addition, SYSCO CORP has modestly surpassed the industry average cash flow growth rate of -8.34%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Food & Staples Retailing industry and the overall market on the basis of return on equity, SYSCO CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

Sysco Corporation, through its subsidiaries, engages in the marketing and distribution of a range of food and related products primarily to the foodservice or food-away-from-home industry. Sysco has a market cap of $20.4 billion and is part of the services sector and wholesale industry. Shares are up 7.5% year to date as of the close of trading on Tuesday.

You can view the full Sysco Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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