SYY Q4 Earnings Beat Estimates on Volume and Cost Gains

Adjusted earnings were $1.53 per share, up 3.4% year over year, outpacing the Zacks Consensus Estimate of $1.51. Sales grew 4.7% to $22,124 million and beat the consensus mark of $21,921 million. 

Sysco’s top line benefited from positive case growth across local and national customers in the United States, along with continued international gains. U.S. Foodservice volume increased 2.5%, while local volume advanced 2.6%.

Comparable sales on a constant-currency basis were $22,077 million, up 4.4% year over year. Foreign exchange added $47 million to total reported sales, including a $46-million benefit to International Foodservice Operations.

Sysco’s Cost Profile Supports Profit Growth

Gross profit increased 3.7% year over year to $4,134 million. Growth reflected higher volumes, improved mix from increased Sysco Brand penetration, strategic sourcing efficiencies and effective management of product costs.

Product cost inflation was 2.8% at the total enterprise level, primarily reflecting higher costs in meat and fresh produce. Adjusted operating expenses increased 3.6% to $2,994 million as sales headcount and capacity investments were partly offset by cost-out efficiencies.

Adjusted operating income rose 4.1% to $1,140 million. Adjusted operating margin was 5.15%, down 3 basis points from the prior-year quarter as adjusted expense growth slightly outpaced the increase in gross profit.

Adjusted EBITDA advanced 4.7% to $1,346 million, reflecting the benefit of operating productivity and continued business growth.

Sysco’s Segments Deliver Broad-Based Sales Growth

U.S. Foodservice Operations sales increased 4.4% to $15,406 million. Total case volume rose 2.5%, while local case volume advanced 2.6%. Gross profit grew 3% to $2,958 million, though gross margin contracted 26 basis points to 19.20%. Adjusted operating income edged up 0.1% to $1,059 million.

International Foodservice Operations sales climbed 6.7% to $4,191 million. On a constant-currency basis, sales increased 5.6% to $4,145 million. Gross margin expanded 12 basis points to 21.69%, while adjusted operating income jumped 15.7% to $228 million. Constant-currency adjusted operating income rose 14.7%.

SYGMA sales increased 3.1% to $2,231 million. Gross profit rose 2.9% to $175 million, while operating income advanced 11.1% to $30 million despite a 2-basis-point decline in gross margin.

The Other segment generated sales of $296 million, up 2.8%. Gross margin expanded 273 basis points to 26.69%, while adjusted operating income increased 30% to $13 million.

SYY’s Cash Flow Supports Capital Returns

For fiscal 2026, cash flow from operations increased 5.1% to $2,638 million. Free cash flow rose 16.3% to $2,114 million, aided by lower additions to plant and equipment compared with the prior year.

Sysco returned $1,237 million to shareholders through $1,037 million in dividends and $200 million in share repurchases. The company ended fiscal 2026 with cash and cash equivalents of $1,786 million and total liquidity of $4,800 million.

Sysco Issues Fiscal 2027 Growth Guidance

Management introduced fiscal 2027 guidance, calling for sales growth of 6-7% and adjusted earnings growth of 9-11% on a 53-week basis. The outlook reflects expectations for continued positive momentum and further productivity gains.

The guidance includes approximately $100 million in cost savings from AI-enabled inventory management, improved forecasting accuracy, coding efficiency, routing optimization and back-office automation. Sysco expects these initiatives and previously announced cost actions to support profit growth and operating-margin expansion.

Shares of this Zacks Rank #3 (Hold) company have gained 7.2% over the past year against the industry’s decline of 17.1%.

Better-Ranked Stocks to Consider

Darling Ingredients Inc. DAR, a global developer and producer of sustainable natural ingredients derived from edible and inedible bio-nutrients, currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

The Zacks Consensus Estimate for Darling’s current fiscal year sales calls for 13.2% growth from the prior-year levels. The consensus estimate for current fiscal-year earnings per share (EPS) stands at $5.34, which implies substantial growth from the year-ago period. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.

The Vita Coco Company, Inc. COCO, a leading beverage company that develops, markets and distributes coconut water and other plant-based beverages, currently sports a Zacks Rank #1. COCO delivered a trailing four-quarter earnings surprise of 21.9%, on average.

The Zacks Consensus Estimate for The Vita Coco Company’s current fiscal-year sales and earnings calls for growth of 31.6% and 64.7%, respectively, from the year-ago figures.

US Foods Holding Corp. USFD engages in the marketing, sale and distribution of fresh, frozen and dry food and non-food products to foodservice customers in the United States. USFD currently carries a Zacks Rank #2 (Buy). US Foods Holding delivered a trailing four-quarter earnings surprise of 1.4%, on average.

The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings implies growth of 5.1% and 16.3%, respectively, from the year-ago figures.

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