SYSCO Earnings: Despite Shrinking Margins, Tops Wall Street Profit and Revenue Estimates

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S&P 500 (NYSE:SPY) component SYSCO Corporation (NYSE:SYY) reported its results for the first quarter. Sysco, through its subsidiaries and divisions, is a distributor of food and related products.

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SYSCO Corporation Earnings Cheat Sheet

Results: Net income for the food items-wholesale fell to $286.6 million (49 cents per share) vs. $302.7 million (51 cents per share) a year earlier. This is a decline of 5.3% from the year-earlier quarter.

Revenue: Rose 4.7% to $11.09 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: SYSCO Corporation reported adjusted net income of 58 cents per share. By that measure, the company beat the mean estimate of 50 cents per share. It beat the average revenue estimate of $10.49 billion.

Quoting Management: “Solid sales growth and effective overall operating expense management contributed to increased adjusted EPS in our underlying business for the quarter. Volume gains drove our top line growth as food cost inflation moderated from the historically high levels experienced in recent quarters,” said Bill DeLaney, Sysco’s president and chief executive officer. “Regarding our multiyear business transformation initiative, we recently achieved a significant milestone by successfully and simultaneously deploying for the first time our new technology platform in two operating companies.”

Key Stats:

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 0.3 percentage point from the year-earlier quarter to 18.1%. Over that time, margins have contracted on average 0.5 percentage point per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 5.9% to $11.05 billion in the fourth quarter of the last fiscal year. The figure rose 7.6% in the third quarter of the last fiscal year from the year earlier and climbed 9.2% in the second quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income fall in each of the last two quarters. In the fourth quarter of the last fiscal year, net income fell 8% from the year-earlier quarter.

The company topped expectations last quarter after falling short of forecasts in the fourth quarter of the last fiscal year with net income of 53 cents versus a mean estimate of net income of 54 cents per share.

Looking Forward: The average estimate for the second quarter remains unchanged at 43 cents a share. The average estimate for the fiscal year is $2.01 per share, down from $2.02 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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