Sysco Corporation
SYY · NYSE
Next quarter
Reports Oct 27, 2026.
Consensus is $1.17 EPS for Sep 2026 across 6 estimates, ranging $1.05 to $1.20.
SYY Jun 2026
- 1.32%
- +1.72%
- $1.51
- $1.53
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Highlights
- EPS beat: Adjusted diluted EPS was $1.53, up 3.4% year over year and 1.32% above the $1.51 consensus; GAAP diluted EPS was $1.15, up 4.5%.
- Quarterly growth: Fourth-quarter sales increased 4.7% to $22.1 billion, while adjusted operating income rose 4.1% to $1.1 billion and adjusted net earnings increased 2.5% to $734 million.
- Volume momentum: U.S. Foodservice case volume grew 2.5%, including 2.6% local volume growth; International local volume increased 4.5%.
- International outperformance: International sales increased 6.7% to $4.2 billion, or 5.6% in constant currency, and adjusted operating income rose 15.7% to $228 million.
- Margin execution: Total gross margin declined 17 basis points to 18.7%, but operating expenses grew only 1.7%, helping GAAP operating income increase 10.6% to $983 million.
- FY27 outlook: Sysco introduced 53-week guidance for 6%-7% sales growth and 9%-11% adjusted EPS growth.
- Cost savings and AI: The FY27 outlook includes approximately $100 million of efficiency improvements from AI-enabled process transformation and previously announced cost actions.
- Cash returns: Fiscal 2026 operating cash flow increased 5.1% to $2.6 billion, free cash flow rose 16.3% to $2.1 billion, and Sysco returned approximately $1.2 billion through dividends and repurchases.
Analysis
Sysco finished fiscal 2026 with a better-than-expected fourth quarter. Adjusted EPS of $1.53 exceeded the $1.51 consensus by 1.32% and increased 3.4% from $1.48 a year ago. Sales rose 4.7% to $22.1 billion, adjusted operating income increased 4.1% to $1.1 billion, and adjusted net earnings grew 2.5% to $734 million. Against the seasonally smaller third quarter, sales increased from $20.52 billion to $22.1 billion, while operating income rose from $619 million to $983 million and net income from $340 million to $551 million.
The print was defined by improving volume, a sharp International contribution and cost discipline. U.S. Foodservice case volume rose 2.5%, with local volume up 2.6%, while International adjusted operating income increased 15.7% to $228 million and marked the segment’s eleventh consecutive quarter of double-digit growth. Gross margin nevertheless contracted 17 basis points to 18.7%, and adjusted operating margin fell 3 basis points to 5.2%. For the full year, sales increased 3.9% to $84.6 billion and adjusted EPS rose 3.4% to $4.61, despite GAAP net earnings declining 3.9% to $1.8 billion. Management’s FY27 guidance calls for 6%-7% sales growth and 9%-11% adjusted EPS growth on a 53-week basis.
Quarterly operating result
Sysco’s fourth-quarter result combined moderate top-line growth with stronger GAAP operating leverage. Sales increased $986 million year over year to $22.124 billion, while gross profit rose 3.7% to $4.134 billion. Operating income increased 10.6% to $983 million, although the adjusted measure, which excludes restructuring, transformation and acquisition-related costs, grew 4.1% to $1.140 billion. Higher incentive compensation costs reduced adjusted EPS by approximately $0.01.
- Net earnings increased 3.8% to $551 million from $531 million, while adjusted net earnings rose 2.5% to $734 million from $716 million.
- GAAP operating margin improved 23 basis points to 4.44%; adjusted operating margin declined 3 basis points to 5.15%.
- The quarter’s $1.53 adjusted EPS compared with $1.48 in the year-ago quarter and $0.71 in the immediately preceding third quarter.
Volume and gross margin
The underlying demand picture improved, particularly in local customers, but product-cost inflation and mix kept pressure on gross margin. Enterprise product cost inflation was 2.8%, concentrated in meat and fresh produce. Management attributed gross-profit growth to local volume, higher Sysco Brand penetration, sourcing efficiencies and inflation management, while continuing to invest in sales capacity and distribution infrastructure.
- U.S. Foodservice: Sales increased 4.4% to $15.4 billion and total case volume rose 2.5%, including 2.6% local case growth. Gross profit increased 3.0% to $3.0 billion, but gross margin declined 26 basis points to 19.2%.
- Sysco Brand mix: U.S. Broadline brand sales represented 35.5% of cases, down 4 basis points year over year; Local brand penetration was 46.4%, up 30 basis points.
- Enterprise margin: Gross margin fell 17 basis points to 18.7%, while operating expenses increased just 1.7% to $3.151 billion, below the 4.7% sales increase.
International momentum
International remained the clearest operating bright spot. Sales growth was 6.7% as reported and 5.6% in constant currency, with foreign exchange contributing $46 million. Gross margin expanded 12 basis points to 21.7%, and adjusted operating income increased 15.7% to $228 million, or 14.7% in constant currency, as adjusted expense growth remained below sales growth.
- International gross profit increased 7.3% to $909 million, or 6.0% in constant currency.
- Reported operating income rose 2.1% to $148 million, with restructuring and acquisition-related costs accounting for the difference between GAAP and adjusted growth.
- The segment delivered its eleventh consecutive quarter of double-digit adjusted operating income growth.
FY27 productivity plan
The new fiscal 2027 outlook places productivity and transformation at the center of the next phase of earnings growth. Sysco expects approximately $100 million of combined cost-outs, including carry-forward benefits from earlier actions. The company said the initiatives are intended to support both bottom-line growth and margin expansion rather than relying solely on volume or pricing.
- Guidance: On a 53-week basis, sales are expected to grow 6%-7% and adjusted EPS 9%-11%.
- AI applications: Planned uses include inventory management and forecasting, coding efficiency, routing optimization and back-office automation.
- Context: Fiscal 2026 adjusted operating income increased 2.6% to $3.6 billion and adjusted EPS rose 3.4% to $4.61, while adjusted operating margin declined 6 basis points to 4.27%.
Cash flow and capital returns
Cash generation strengthened despite the year’s earnings pressures. Fiscal 2026 operating cash flow reached $2.6 billion and free cash flow was $2.1 billion, allowing Sysco to maintain substantial shareholder distributions while funding its operating network and transformation program.
- Operating cash flow increased 5.1% from the prior year, while free cash flow increased 16.3%.
- Capital expenditures, net of asset-sale proceeds, were $524 million.
- Sysco paid $1.0 billion in dividends and repurchased $200 million of stock; ending cash was $1.8 billion, total liquidity was $4.8 billion and net debt to adjusted EBITDA was approximately 2.7 times.
