Buy or Sell Sysco Stock Before Earnings?

by Rob Otman
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Sysco (NYSE: SYY) is a large cap company that operates within the food and staples retailing industry. Its market cap is $29 billion today, and the total one-year return is 5.05% for shareholders.

Sysco stock is underperforming the market. It's beaten down, but it reports earnings next week. So is it a good time to buy? To answer this question, we've turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.

Our system looks at six key metrics...

Earnings-per-Share (EPS) Growth: Sysco reported a recent EPS growth rate of 15.79%. That's below the food and staples retailing industry average of 32.77%. That's not a good sign. We like to see companies that have higher earnings growth.

Price-to-Earnings (P/E): The average price-to-earnings ratio of the food and staples retailing industry is 31.8. And Sysco's ratio comes in at 23.67. It's trading at a better value than many of its competitors.

Debt-to-Equity The debt-to-equity ratio for Sysco stock is 355.82. That's above the food and staples retailing industry average of 65.51. That's not a good sign. Sysco's debt levels should be lower.

Free Cash Flow per Share Growth Sysco's FCF has been lower than that of its competitors over the last year. That's not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It's one of our most important fundamental factors.

Profit Margins The profit margin of Sysco comes in at 1.76% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Sysco's profit margin is below the food and staples retailing average of 3.11%. So that's a negative indicator for investors.

Return on Equity Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Sysco is 33.43%, and that's above its industry average ROE of 15.93%.

Sysco stock passes two of our six key metrics today. That's why our Investment U Stock Grader rates it as a Hold With Caution.

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Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That's why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.

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