Why Sysco Served Up Gains in 2012

The year is nearing its end, and now's a good opportunity to look at what happened throughout 2012 to the stocks you follow. If you know the important things that a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.

Today, I'll look at Sysco (NYSE: SYY  ) . The food-services giant distributes products throughout the U.S., dwarfing its much smaller competitors. But the company isn't satisfied with its past success and has instead been looking for new ways to expand. Read on for more of what happened with shares of Sysco this year.

Stats on Sysco

Year-to-date stock return

11.9%

Market cap

$18.6 billion

Revenue, past 12 months

$42.9 billion

Net income, past 12 months

$1.11 billion

1-year revenue growth

6.8%

1-year net income growth

(4.3%)

Dividend yield

3.5%

CAPS rating (out of 5)

*****

Source: S&P Capital IQ.

How Sysco left a good taste in investors' mouths
Sysco maintains a truly immense list of customers, with more than 400,000 restaurants, hotels, schools, and other institutions using Sysco's services. That has given the company huge advantages over smaller players Nash Finch (NASDAQ: NAFC  ) and United Natural Foods (NASDAQ: UNFI  ) , which are both much more vulnerable to adverse business conditions and have far less pricing power than Sysco does.

What makes Sysco's performance all the more remarkable is that it came despite some pretty big challenges. Food inflation has been a concern all year, and this summer's drought conditions throughout much of the Midwest growing region stoked new fears of higher prices for grains and animal feed. Moreover, with restaurant traffic tied to consumer spending, the weak economic recovery has led to some surprising shortfalls even among popular restaurants. Buffalo Wild Wings (NASDAQ: BWLD  ) and Chipotle Mexican Grill (NYSE: CMG  ) both plunged during the summer months following unexpected slowdowns in growth.

Perhaps in response, Sysco has decided to follow the lead of many other companies by expanding abroad. In October, it made two foreign buyouts, one of the food service distribution division of Ireland's Keelings Foods, and the other of Canadian grocery retailer Metro Richelieu's Distagro division. The move only cements a longer-term trend that Sysco has implemented to bolster overseas sales.

Sysco has plenty of future potential, and with a healthy dividend yield and long history of rising payouts, the company has treated its long-term shareholders well.

Is the restaurant industry cooling off?
Sysco depends on a healthy restaurant industry for profits. But even red-hot chain Chipotle has cooled off lately, sending its stock into a tailspin. Fool analyst Jason Moser's new premium research report analyzes the burrito maker's situation and answers the question investors are asking: Can Chipotle still grow? If you own or are considering owning shares in Chipotle, you'll want to click here now and get started! 

Click here to add Sysco to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2172522, ~/Articles/ArticleHandler.aspx, 4/18/2014 7:37:00 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement