Shares of Sysco Corporation (SYY -2.24%), the gigantic food services supplier, slipped 2.5% through 2:12 p.m. ET Tuesday despite "beating earnings" on top and bottom lines this morning.
Analysts forecast Sysco would earn $1.39 per share on $21 billion in sales for its fiscal Q4 2025. Instead, Sysco earned $1.48 per share on $21.1 billion.
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Sysco Q4 earnings
Sysco grew sales 3% year over year -- that's the good news. The bad news is that profit margins on those sales declined due to a goodwill impairment charge, cutting earnings by 13% in comparison to last year. Share buybacks helped mitigate the decline in earnings per share, but EPS still declined 11%, to $1.10 per share.
For the full fiscal year, sales also increased 3%, with net income falling 6% and earnings per share down 4% at $3.73. So while sales growth was pretty steady all year long, earnings took a turn for the worse in the year's final quarter.
Is Sysco stock a sell?
Sysco CEO Kevin Hourican said the company will keep on growing sales at at least 3% in fiscal 2026 -- and perhaps as much as 5%. Sales could reach $84 billion or $85 billion. Earnings won't grow quite as fast, but at least they will grow. Hourican is expecting 1% to 3% earnings improvement to somewhere between $4.50 and $4.60 per share.
That's less than the $4.70 per share that Wall Street was looking for. It probably pushes the stock's valuation up from just under 17 times earnings, to just over. With a 2.7% dividend yield, I'd want to see the company growing earnings in at least the midteens before buying.
Unfortunately, it doesn't look like Sysco's going to manage that. At least not this year.
