Sysco (SYY) To Report Q3 Earnings: What Awaits The Stock?

Sysco Corporation (SYY - Free Report) is slated to report third-quarter fiscal 2017 results on May 8, before the market opens. The question lingering in investors’ minds is, whether this global food products maker and distributor, will be able to maintain its positive earnings surprise streak in the to-be-reported quarter. The company’s earnings have outpaced the Zacks Consensus Estimate in five straight quarters now, with a trailing four-quarter average of 9.3%. Let’s delve deeper how things are shaping up for this announcement.

What Does the Zacks Model Unveil?

Our proven model does not show that Sysco is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Sysco Corporation Price, Consensus and EPS Surprise

Sysco Corporation Price, Consensus and EPS Surprise | Sysco Corporation Quote

Sysco has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 51 cents. However, the company’s Zacks Rank #3 increases the predictive power of ESP, but we need to have a positive ESP in order to be confident about earnings surprise.

Which Way Are Estimates Treading?

Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company right before earnings release. The Zacks Consensus Estimate for the third quarter and fiscal 2017 has been stable over the last seven days. In fact, the current Zacks Consensus Estimate of 51 cents and $2.46 for the said quarter and fiscal 2017 reflects a year-over-year growth of 10.9% and 17.1%, respectively.

Moreover, analysts polled by Zacks expect revenues of $13.1 billion for the fiscal third quarter, up 8.8% from the year-ago quarter. Also, revenues for 2017 are projected to grow more than 8% to $54.5 billion.

Factors at Play

Sysco has a strong business portfolio and has been taking initiatives to reduce costs. Also, the company has been carrying out various acquisitions to grow its distribution network and customer base. We note that Sysco’s sales have been increasing consistently on the back of acquisitions and volume growth. Evidently, the company is gaining from the London-based Brakes Group acquisition. Further, margin improvement has also been driving the profits higher in the past quarters.

However, Sysco remains concerned about the deflationary trend which is likely to continue in the fiscal year 2017, creating modest sales and gross profit headwind. The overall sluggish restaurant industry is also impacting the company.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or ...

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