The board of
) has approved its 18th share repurchase program comprising 20
million shares. The company has been repurchasing shares since
1992. The share repurchase program is part of an ongoing effort
to keep the number of shares outstanding relatively constant. The
company has an estimated 586 million shares outstanding.
In addition, Sysco's board declared a quarterly dividend of 28
cents per share. The dividend will be paid on Oct 25, 2013 to
shareholders of record as of Oct 4.
We appreciate Sysco's efforts to consistently enhance
long-term shareholder value even amid a volatile economy. The
share buyback program helps the company to reduce outstanding
share count, thereby increasing earnings per share and return on
equity. Apart from bolstering shareholder value, this strategic
move will also lift the relatively undervalued share price.
In the recently concluded fourth quarter, Sysco generated $1.5
billion of cash from operations. Capital expenditure in the
fourth quarter of fiscal 2013 was approximately $139 million
related to facility replacements, expansions and replacements to
Cash and cash equivalents were $412.3 million as of Jun 29,
2013 compared with $331.5 million at the end of Mar 30, 2013.
Long-term debt was $2.64 billion at the end of fourth quarter
compared with $2.56 billion at the end of the third quarter.
Sysco, a global leader in selling, marketing and distribution
of food products, reported better-than-expected fourth quarter
fiscal 2013 adjusted earnings (excluding business transformation
expenses and one-time items) of 59 cents. Earnings beat the Zacks
Consensus Estimate of 55 cents by 7.3% but declined from the
prior-year quarter earnings of 63 cents by 6.3% due to weak
restaurant traffic. The year-over-year results were also dampened
by a sluggish macroeconomic scenario and weather related
headwinds, which in turn were reflected in lower consumer
Sysco's sales grew 5.0% on a year-over-year basis to $11.60
billion in the fourth quarter of fiscal 2013, driven by 3.0%
volume growth (including acquisitions). Acquisitions contributed
2.1% to sales growth, while currency translation decreased sales
by 0.1%. Fourth quarter sales missed the Zacks Consensus Estimate
of $11.62 billion.
Gross profit increased 1.2% to $2.0 billion in the quarter but
the growth was marginal due to ongoing competitive pressure and
shift in customer mix. Adjusted operating income however declined
7.3% in the quarter to $564.7 million due to higher adjusted
We appreciate the company's strategy of growth through
acquisitions and its efforts to reduce costs and improve
efficiency. However, we are concerned about rising costs due to
fuel price hikes and other inputs, which hurt margins.
Sysco holds a Zacks Rank #4 (Sell). However, there are other
stocks in the retail and wholesale sector that are worth
considering. These include
Green Mountain Coffee Roasters Inc
Nash Finch Co
United Natural Foods Inc
), all of them holding a Zacks Rank #2 (Buy).
GREEN MTN COFFE (GMCR): Free Stock Analysis
NASH FINCH CO (NAFC): Free Stock Analysis
SYSCO CORP (SYY): Free Stock Analysis Report
UTD NATURAL FDS (UNFI): Free Stock Analysis
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