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Sysco (SYY) Advances Growth Initiatives, Sets Financial Targets

Sysco Corporation SYY offered insights into its ongoing endeavors to enhance core performance and advance the Recipe for Growth strategy, aimed at sustaining growth. Introduced three years ago, this strategy focuses on fostering market expansion across five pivotal pillars — Digital, Products and Solutions, Supply Chain, Customer Teams and Future Horizons.

The leading foodservice distributor also outlined detailed financial growth targets for the next three fiscal years, emphasizing sustainable growth, operational excellence and balanced capital return. In this regard, the company expects to achieve sales growth of 4-6% annually through a combination of organic initiatives and strategic acquisitions. Management anticipates adjusted operating income to increase by 6-8% yearly, driven by positive operating leverage. Adjusted earnings per share are also targeted to rise by 6-8% annually.

Moreover, Sysco aims to deliver a total return to shareholders of 9-11% per year, achieved through a growing dividend and other shareholder-friendly measures. The company’s growth algorithm underscores a balanced approach to capital allocation. The strategy entails maintaining an investment-grade balance sheet, returning value to shareholders, and simultaneously investing in the business for long-term sustainability.

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Zacks Investment Research

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More on Growth Initiatives

Sysco is enhancing core business performance by fostering local case growth, while also optimizing its merchandising and supply chain capabilities to capitalize on scale. Management is leveraging its global footprint to drive local growth internationally. This involves scaling merchandising strategies, such as expanding the presence of Sysco Brand products and implementing customer-focused programs like Sysco Your Way, offering customers the flexibility required for their growth.

The company aims to accelerate independent market share growth by implementing Total Team Selling, a strategy that integrates specialists and sales teams from Broadline and Specialty businesses.

The company unveiled Sysco Marketplace, a new initiative allowing third-party suppliers to showcase and sell their products on Sysco's digital shopping platform, Shop. This innovation enables direct shipment of products to Sysco customers. Marketplace supplements the company’s Broadline and Specialty offerings, ensuring comprehensive fulfillment of customer requirements. It empowers smaller suppliers, allowing Sysco to leverage its scale for a positive impact.

All said, the company’s multifaceted approach to sustainable growth, combined with its commitment to innovation and customer-centric initiatives, positions it strongly for continued success in the dynamic foodservice industry.

This Zacks Rank #3 (Hold) company’s shares have moved up 2% in the past year against the industry’s 5.6% decline.

Key Food Picks

Vital Farms Inc. VITL offers a range of produced pasture-raised foods. It currently sports a Zacks Rank #1 (Strong Buy). VITL has a trailing four-quarter average earnings surprise of 102.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 22.5% and 59.3%, respectively, from the year-ago reported numbers.

Utz Brands Inc. UTZ manufactures a diverse portfolio of salty snacks, currently carrying a Zacks Rank #2 (Buy). UTZ has a trailing four-quarter earnings surprise of 2% on average.

The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 24.6% from the year-ago reported numbers.

McCormick & Company, Inc. MKC is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for McCormick & Company’s current fiscal-year sales and earnings indicates advancements of 0.3% and 5.6%, respectively, from the year-ago reported figures. MKC has a trailing four-quarter earnings surprise of 5.4%, on average.


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