Comments on yet another investment opinion: Sysco Foods

Thank you for your comments and may you enjoy grea...

2009-06-16T08:56:55.832-05:00

Thank you for your comments and may you enjoy great success at UBS.

I would simply add on SYY that the current environment is the downside for Sysco - and that down side involves positive earnings, positive cash flow, and increasing its competitive advantage. This is a great company for those who are patient.

As for Jeff's comment: I'm less concerned about growth. Many companies have produced fine long term results with modest volume growth. It is important to realize that the U.S. population will continue to grow and that rising standards of living translate into more people eating at resteraunts. This provides sufficient long term growth for the industry for Sysco to grow earnings and dividends fast enough to outperform the S&P 500 in terms of total return.

Just wanted to circle back and say thanks for shar...

2009-05-11T12:10:00.000-05:00

Just wanted to circle back and say thanks for sharing your thoughts. I have SYY on my buy list but am hoping to see a correction in the overall market that takes SYY down a bit.

Jeff

They say that they have about 16% of a $231 billio...

2009-05-06T09:59:00.000-05:00

They say that they have about 16% of a $231 billion market. However, that depends on how you define the market. I've seen estimates as high as $400 billion. Of course, much of that business may not be a good fit for Sysco, but in any case I believe they can grow domestic share for quite a while.

They have a significant presence in Canada with over 20 distribution centers. They recently announced the acquisition of a foodservice distributor in Ireland, which I believe is their first move outside of North America. However, they do have a small subsidiary called International Food Group which ships product to over 120 countries, primarily to service international chain customers.

Management said recently that while their primary focus is North America, they continue to explore and stay abreast of international acquisition opportunities.

The latest 10K provides this breakdown of sales: ...

2009-05-06T09:49:00.000-05:00

The latest 10K provides this breakdown of sales: Restaurants 63%, Hospitals and nursing homes 10%, Schools and colleges 5%, Hotels and motels 6%, and Other 16%. Most of the restaurant category is represented by independents and small chains, but a significant part is made up of large chain restaurants. The largest customer by revenue is the Wendy's chain, which made up 5% of fy2008 revenue, and a smaller percentage of profits.

The broadline restaurant business produces the highest margins and highest share of total operating income. However, it also has higher expenses due to greater delivery costs, bad debt expense, sales commission expense, etc.

Sysco is interesting, they have a nice dividend th...

2009-05-05T22:39:00.000-05:00

Sysco is interesting, they have a nice dividend that has grown consistently over the years, which is something I like. They are also very strong financially which is important now more than ever.

I am wondering however, do they still have plenty of room to grow in the US and Canada? I know the industry is huge (200b?) but can they really continue to gain market share or will they start getting to the point where they can only grow as fast as the underlying market?

Are there any plans to expand overseas that you know of?

Thanks for any insights.

Jeff

Do you know how Sysco's sales break down by custom...

2009-05-05T18:54:00.000-05:00

Do you know how Sysco's sales break down by customer type (i.e., high-end restaurants, chains, etc.) -- or something like that?

I don't have any special insight. It's having a g...

2009-05-05T12:30:00.000-05:00

I don't have any special insight. It's having a good day today (+11% as I write this). But it's not the kind of stock that I would buy-- far too speculative. That doesn't mean that it can't double or triple or more. You can make (or lose) a lot of money bottom-fishing in stocks like this. It's just not my style.

What do you think of PIR?

2009-05-05T10:42:00.000-05:00

What do you think of PIR?