Market Overview

This Signal Shows Upside For Sysco Foods

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  • Rage Frameworks believes that now is the time to buy SYSCO Corporation (NYSE: SYY).
  • The firm sees strong fundamental performance from Sysco, including best-in-class cash flows.
  • Rage’s "alpha" RTI signal rating for Sysco is currently at bullish levels.

A new report by Rage Frameworks indicates that now is the time for investors to be buying Sysco Corp. The firm is bullish on the company’s fundamentals and sees several potential catalysts down the road.

Fundamental Indicators

Rage likes that Sysco has the highest free cash flow per share ($1.65) among its large food distributor peers, such as SpartanNash Co (NASDAQ: SPTN) and G Willi-Food International Ltd (NASDAQ: WILC). Rage sees this free cash flow as one of the key ingredients in Sysco’s three-year $400 million growth plan.

Buyout Target

According to Rage, Sysco also "looks like a great M&A target." Back in August, Trian Fund Management disclosed a 7 percent stake in Sysco, a position which the fund had been accumulating since June.

Growth Plateau?

The biggest potential headwind that Sysco faces is the possibility that growth in the overall food distribution market in the US and Canada may have plateaued. Sysco CEO Bill DeLaney recently said that restaurant traffic has been rebounding, but Rage projects “lackluster growth” in U.S. retail sales throughout the holiday season and into 2016.

RTI Indicator

On the technical side, Rage notes that Sysco’s RAGE "alpha" RTI signal rating is currently at its peak levels of 2015. Rage explains that this is a very bullish indicator for the stock in the near-term.

Sysco’s stock has climbed 12.3 percent over the past three months, but remains up only 3 percent year-to-date.

Disclosure: the author holds no position in the stocks mentioned.

Latest Ratings for SYY

DateFirmActionFromTo
Nov 2020BMO CapitalUpgradesMarket PerformOutperform
Nov 2020Credit SuisseMaintainsOutperform
Nov 2020Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for SYY
View the Latest Analyst Ratings

 

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Posted-In: Rage FrameworksAnalyst Color Restaurants Analyst Ratings General

Latest Ratings

StockFirmActionPT
HYMCBMO CapitalInitiates Coverage On
DEMorgan StanleyMaintains335.0
SBNYRaymond JamesMaintains138.0
CORTHC Wainwright & Co.Maintains32.0
CYBBFCitigroupDowngrades
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