Reasons Sysco Corporation (SYY) Deserves a Closer Look

Analysts at Pivotal Research Group lifted target price for shares of Sysco Corporation (NYSE:SYY) but repeated their Sell recommendation for the stock in their opinion released on November 06. The price target has been raised from $62 to $54. Analysts at Pivotal Research Group are sticking to their Sell recommendation. However, on August 14, they lifted target price for these shares to $62 from $58. Analysts at Pivotal Research Group, made their first call for the stock with a Sell rating, according to a research note that dated back to August 14.

By watching the trading activity of corporate insiders, it will become easier to get a sense of Sysco Corporation (NYSE:SYY)’s prospects. The earliest insider trade took place on 11/28/2018. Trian Fund Management, L.P. parted with a total of 1.52 million shares of company at average share price of $66.5. The total for the sales was set at $101.38 million. After this transaction, the Director account balance stood at 28.3 million shares. The stock lost -0.84 percent since that insider sale. On 11/28/2018, Trian Fund Management, L.P., Director, sold 1.52 million shares at a price per share of $66.5. This removed 101.38 million shares from the insider’s fortune and the stock saw a -0.84 percent retreat in value since the news became public. This transaction left 28.3 million shares in the Director account. On 11/20/2018, Director Trian Fund Management, L.P. performed a sale transaction worth $147.22 million. This sale at $66.45 each has eliminated 2.22 million shares from the insider’s portfolio position. Meanwhile, shares have recorded -0.77 percent decrease since the transaction was reported. The insider now is left with 35.44 million shares remaining in the account. Trian Fund Management, L.P., who performs the Director job, sold 2.22 million shares for $147.22 million. The disposal occurred on 11/20/2018 was priced at $66.45 per share. The share price plunged -0.77 percent since the reporting date. Trian Fund Management, L.P. now left with a stake of 35.44 million SYY stock worth $2336.89 million after the insider selling.

Sysco Corporation (SYY) is expected to jump by 7.78 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $82-month high price target. This represents a whopping 24.36 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $74, which represents a return potential of 12.22 percent when compared to the closing price of the stock of $65.94 on Thursday, December 06. The lowest price target for the stock is $54 — slightly more than -18.11 percent from SYY’s current share price.

The shares are currently floating around the first support level of $64.69. Below this, the next support is placed in the zone of $63.45. Till the time, the SYY stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 41.83 on daily chart, which may remain a cause for concern. If the price breaks below $63.45 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $66.59 mark may result into a pull-back move towards $67.25 level.

SYY shares dropped -0.19 points or -0.29 percent on Thursday to $65.94 with a heavy trade volume of 4.944 million shares. After opening the session at $65.83, the shares went as high as $66 and as low as $64.1, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $34.4 billion and now has 520.87 million shares outstanding. Sysco Corporation (SYY) stock has gained 2.14 percent of market value in 21 trading days.

SYY stock has a trailing 3-year beta of 0.56, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $2.7 a share in the trailing twelve months. The stock’s value has surged 8.58 percent year to date (YTD) against a rise of 11.23 percent in 12 month’s time. The company’s shares still trade -13.21 percent away from its 1-year high of $75.98 and 17.73 percent up from 52-week low of $56.01. The average consensus rating on the company is 2.4, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Shares of Sysco Corporation (SYY) are trading at a P/E ratio of 24.19 times earnings reported for the past 12 months. The industry SYY operates in has an average P/E of 45.35. Its P/E ratio went as low as 23.98X and as high as 33.35 over the 5-year span. Further, it is sporting a 0.58 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.3. 18.9 percent is the gross profit margin for Sysco Corporation and operating margin sits at 3.9 percent. Along with this, the net profit margin is 2.5 percent.

SYY will be showing off its Q2 earnings on February 11. Analysts are forecasting revenue to climb 3 percent to $14.9B in the next fiscal quarter, while earnings are seen soaring by nearly 12.12 percent to $0.74 per share. History has shown that shares in Sysco Corporation have gone down on 21 different earnings reaction days and are predicted to add 0.03 percent when the company reports upcoming earnings. In last reported earnings results, it earned $0.91 per share, worse than the $0.92, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $15.2B, worse than the $15.4B analysts expected. Earnings are estimated to increase by 23.7 percent this year, 10.56 percent next year and continue to increase by 11.8 percent annually for the next 5 years.