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Why Sysco Served Up Gains in 2012

By Dan Caplinger - Dec 29, 2012 at 11:00AM

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Let's look back at how the year went for this company.

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 (SYY 0.29%). 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 (UNFI 0.91%), 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 (BWLD) and Chipotle Mexican Grill (CMG -0.05%) 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.

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

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Stocks Mentioned

Sysco Corporation Stock Quote
Sysco Corporation
SYY
$84.81 (0.29%) $0.25
Chipotle Mexican Grill, Inc. Stock Quote
Chipotle Mexican Grill, Inc.
CMG
$1,288.20 (-0.05%) $0.67
United Natural Foods, Inc. Stock Quote
United Natural Foods, Inc.
UNFI
$39.73 (0.91%) $0.36
Buffalo Wild Wings, Inc. Stock Quote
Buffalo Wild Wings, Inc.
BWLD

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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