Sysco Earnings: An Early Look

With hundreds of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Sysco (SYY 0.43%). The food-distribution giant has a commanding presence over its much smaller fellow players in the industry, but Sysco has still had to overcome tough challenges. Let's take an early look at what's been happening with Sysco over the past quarter and what we're likely to see in its quarterly report next Monday.

Stats on Sysco

Source: Yahoo! Finance.

Can Sysco feed investors a nice report?
Analysts have been comfortable in keeping their estimates on Sysco constant over the past three months, with a drop of just a penny per share in their consensus on earnings. The stock has been stable as well, rising about 3% since late October.

Sysco benefits greatly from its dominance of the food distribution industry. Peer United Natural Foods largely focuses on organic and health-conscious foods, serving an important niche given the rise of specialty grocery chains in recent years. Similarly, Core-Mark concentrates on the convenience-store market with its own particular snack-heavy focus. Because of the lack of large-scale competition, Sysco has a lot of power to pass through higher costs to its customers, a trait that has been especially handy lately as food inflation has reared its ugly head.

But one thing that Sysco does rely on is a healthy restaurant industry, and lately, that part of its customer base has seen some setbacks. With even growth highfliers Chipotle and Buffalo Wild Wings having seen slowdowns adversely affect their financial results and share prices, Sysco has to stay cognizant of pressure on its customers to avoid pushing them beyond the breaking point.

One thing to keep an eye on is how Sysco is trying to expand internationally. With two buyouts of foreign companies in Canada and Ireland from last October, Sysco should be able to demonstrate how well it has been able to integrate those and numerous other acquisitions over the past year into its overall operations.

To make investors happy, Sysco needs to address how it expects to handle high food costs for the long run, as inflation doesn't seem to be going away. With its strength in the industry, though, Sysco should be able to address concerns to investors' satisfaction.

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