Sysco (SYY:NYS) Fundamental Valuation Report

Fundamental Valuation Report


Consumer Defensive:Food Distribution

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Close Price/Date
$64.56 (USD) 05/11/2018

Weighted Valuation
$69.60 (USD)

Overall Rating
Undervalued by 7.8%

Valuation Models Analyst Consensus: $71.00 (USD)
(in order of importance) Discounted Cash Flow: $76.41 (USD)
Comparables: $51.78 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (SYY:NYS USD)

Price 64.56
Range 63.19 – 65.71
52 week 52.59 – 75.78
Open 64.90
Vol / Avg. 9.31M/2.68M
Mkt cap 33.62B
P/E 23.91
Div/yield 1.41/0.02
EPS 2.70
Shares 520.69M
Beta 0.56

Company Description

Sysco is a leading foodservice distributor, controlling around 16% of the nearly $300 billion potential market. The firm distributes more than 400,000 food and nonfood products to 500,000 customers, including restaurants, healthcare and educational facilities, and lodging establishments. While Sysco derives the bulk of its sales from North America, the tie-up with Brakes a few years ago bolstered its position in Europe, with sales from the region now representing around 10% of its consolidated total.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for SYY:NYS

Using a discounted cash flow model we generated an intrinsic value of $76.41 (USD) for SYY:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

SYY:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $76.41 1% 5% 1% 5%
WACC (or Ke) 6.17 $99.91 $60.79
Terminal Growth Rate 1.20 $62.19 $97.78
Tax Rate 0.27 $83.14 $69.67
Cash Flow 4,078,967,200 $70.88 $81.93
Capital Expenditures -569,566,400 $75.67 $77.14
Long Term Debt 7,859,569,000 $77.16 $75.65

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $51.78 (USD) for SYY:NYS. We also generated a valuation of $41.13 (USD) using other metrics and comparables.
The comparable companies were Alimentation Couche-Tard (ATD.B:TSE), Dollar General (DG:NYS), Dollar Tree (DLTR:NAS), Kroger (KR:NYS) and Target (TGT:NYS).

Company SYY:NYS End Date Value
Earnings/Share $2.70 (USD)
Book Value/Share $4.81 (USD)
Sales/Share $111.00 (USD)
Cash Flow/Share $4.08 (USD)
EBITDA/Share $5.89 (USD)
Price Based on Comps Adjustment Factor (%)
$35.55 (USD) 7.2
$17.37 (USD) 0.0
$75.71 (USD) 59.5
$27.24 (USD) -17.9
$54.82 (USD) 21.4
26.42 PE Ratio 13.17 15.36 17.35 11.71 6.75 14.67
14.82 PB Ratio 3.61 3.45 4.64 2.79 3.22 3.94
0.64 PS Ratio 0.68 0.48 1.22 0.88 0.21 0.62
17.48 PCF Ratio 10.53 11.51 14.24 12.52 7.64 6.75
14.41 EV to EBITDA 9.31 11.02 12.82 9.30 5.40 8.00


Using a multiples approach we generated a valuation of  $64.78 (USD) for SYY:NYS

Company SYY:NYS End Date Value
Earnings/Share $2.70 (USD)
Book Value/Share $4.81 (USD)
Sales/Share $111.00 (USD)
Cash Flow/Share $4.08 (USD)
EBITDA/Share $5.89 (USD)
Price Based on Comps Adjustment Factor
$74.89 (USD) 0
$46.09 (USD) 0
$60.63 (USD) 0
$63.35 (USD) 0
$78.94 (USD) 0
Ratios Ratio Average
PE Ratio 27.74
PB Ratio 9.57
PS Ratio 0.55
PCF Ratio 15.53
EV to EBITDA 13.40

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  SYY:NYS for the last 10 years was  9.19

We ran the Adjusted Book Value for  SYY:NYS and generated a book value of  $4.82 (USD)
By multiplying these we get an adjusted valuation of  $44.23 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for SYY:NYS. The 2 analysts have a concensus valuation for SYY:NYS for 2019 of $71.00 (USD).


Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 1 1 3.2000 Hold 2018-11-2

Current Price: 64.56 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 3.54 3.86 4.31
# EPS Analysts 4 4 1
Mean Revenue 61,422.10 63,429.00 66,233.20
# Revenue Analysts 3 3 1
Mean Target Price 71.00
Mean Cash Flow 4.92 5.60 6.06
Mean EBITDA 3,531.40 3,712.90 4,030.60
Mean Net Income 1,832.40 1,944.10 2,188.10
Mean Debt Outstanding 7,394.60 6,971.70 6,359.20
Mean Tax Rate 25.00 25.00
Mean Growth Rate 10.62
Mean Capital Expenditure 750.30 767.90 840.00

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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