Given the impact that hurricane season had on casual dining chains and fast-food restaurants throughout the Southeast, it should come as little surprise that the company that supplies those eateries with much of their food might also have quarterly sales numbers that are a little watered down. This morning we found out, when food distributor Sysco
Sales figures could have been worse, though; the company noted that nine of its 11 subsidiaries operating in the affected regions managed to improve sales on a year-over-year basis. Furthermore, the gains look respectable relative to the 2.9% third-quarter sales growth posted by rival Royal Ahold's
Earnings continued their upward march, as they have done in each of the past 28 years. Aided by further improvement in operating expenses (which have fallen from 15.1% to 14% over the past 18 months), earnings climbed 9.4% to $0.35 ($225.9 million), in line with estimates.
As the leading company in a mature industry, Sysco enjoys streamlined distribution, purchasing power, and economies of scale. However, after acquiring 120 smaller companies and building an impressive customer base that includes fast-food outlets such as Wendy's
The long-run trend, however, seems to favor consumer preference for dining out rather than staying in, and Sysco provides one of the few products for which demand is a foregone conclusion. The company also offers an attractive dividend yield and some of the highest profitability metrics in the extremely low-margin business.
Operating margins, for example, have expanded to 5%, more than double the 2% of Performance Food Group
For related stories on Sysco, see:
Fool contributor Nathan Slaughter owns none of the companies mentioned.