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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
SYY — frequently asked questions
Is Sysco Corporation overvalued?
In our latest published analysis dated 2026-10-03, SYY looks modestly undervalued. The price recorded at analysis is USD 77.5 versus our fair value of USD 86.2; the high endpoint is presented separately as potential value of USD 109. That implies roughly 11.2% upside to fair value at that date.
Our latest published report, analyzed 2026-10-03, gives SYY a fair value of USD 86.2 and a potential value of USD 109. The conclusion is triangulated across multiple valuation models and weighted by reliability for Sysco Corporation's archetype; it is a dated research output, not a live price.
Should I buy SYY now?
Our latest published rating for SYY, analyzed 2026-10-03, is Buy. Sysco Corporation looks modestly undervalued at the analysis-date price of USD 77.5 versus fair value of USD 86.2; potential value is USD 109. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for SYY?
The dedicated bear-case section in our report analyzed 2026-10-03 documents Sysco Corporation's material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is SYY's rating?
Our latest published rating for SYY, analyzed 2026-10-03, is Buy, with a published moat assessment of 7.5/10 (Narrow). It reflects our fair value of USD 86.2, the potential value of USD 109, and the price recorded at analysis (USD 77.5).
Accelerating warehouse automation and inventory forecasting accuracy represent the primary upside opportunity, unlocking up to $250,000,000 in working capital cash per day of inventory reduction and expanding consolidated operating margins beyond 3.90% toward 4.0%.
Sysco Corporation presents an 11.23% upside opportunity to an intrinsic fair value of $86.19 per share from $77.49 as of 2026-10-02. Dominant scale in U.S. Foodservice Operations, strong cash conversion generating $1,938,000,000 in free cash flow, and inventory productivity initiatives support durable equity value creation.4,6
Downside risks center on cyclical softening in food-away-from-home dining traffic, unhedged inbound freight and fuel cost absorption which reduced Q4 FY2026 gross margin by 17 basis points to 18.7%, and debt service exposure across $14,967,000,000 in total debt. Sysco's computed WACC of 7.0896% reflects debt refinancing requirements over the medium term. Furthermore, International Foodservice operating margin of 2.89% ($463,000,000 operating income on $16,042,000,000 revenue) structurally dilutes domestic profitability until procurement scale matches U.S. levels.2,4,5,8
Countering these headwinds, Sysco's core earnings engine in U.S. Foodservice Operations demonstrated durable scale in FY2026, delivering $58,803,000,000 in revenue and $3,518,000,000 in operating profit (5.98% margin). Core volume growth gained 2.6% in Q4 FY2026 across local and national accounts. Operating cash flow generation reached $2,638,000,000 and free cash flow reached $1,938,000,000 on disciplined capital expenditures of $700,000,000.5,6,7,8
Supply chain productivity initiatives showed measurable progress, with supply chain expenses growing slower than revenue and case volume in FY2026. Outbound fill rates and inventory forecasting accuracy unlock up to $250,000,000 of working capital cash per day of inventory reduction. Concurrently, International Foodservice achieved 11 consecutive quarters of double-digit operating income growth, providing diversified cash flow streams across Canada ($6,513,000,000) and the United Kingdom ($4,487,000,000).5,8
Valuation synthesis establishes a compositefair value of $86.19 per share, anchored primarily by an enterprise DCF model at $97.82 (35% weight), a forward earnings model at $67.81 (30% weight) based on FY2028 consensus EPS of $5.37 and a 16.0x multiple, discounted earnings at $97.71 (20% weight), owner earnings at $69.06 (10% weight), and multi-stage moat fade at $103.25 (5% weight). At $77.49 as of 2026-10-02, Sysco trades at a 10.09% discount to intrinsic value, supporting a Buy rating.1,2,4
Dominant Scale and Route Density in U.S. Foodservice
Sysco's U.S. Foodservice division generated $58,803,000,000 in revenue and $3,518,000,000 in operating income in FY2026, achieving a 5.98% margin and 2.6% case volume growth in Q4 FY2026 through local route clustering and cold-chain scale that smaller peers cannot replicate.5,8
High Free Cash Flow Conversion and Dividend Track Record
We rate Sysco Corporation (SYY) a Buy with a fair value of $86.19 per share, representing an 11.23% implied upside from $77.49 as of 2026-10-02. The shares trade at a 10.09% discount to intrinsic value, underpinned by Sysco's dominant U.S. broadline scale, strong cash conversion exceeding $1.9 billion in free cash flow, and defensible route density.4,6
Company overview
Sysco Corporation is the global leader in selling, marketing, and distributing food and non-food products to restaurants, healthcare and educational facilities, lodging establishments, and other customers who prepare meals away from home. In FY2026, the company generated $84,553,000,000 in consolidated revenue across its broadline, customized, and international distribution operations.
The company's primary operating division, U.S. Foodservice Operations, generated $58,803,000,000 in revenue (69.5% of consolidated total) and $3,518,000,000 in operating income. International Foodservice Operations contributed $16,042,000,000 in revenue, anchored by operations in Canada ($6,513,000,000), the United Kingdom ($4,487,000,000), France ($1,897,000,000), and Sweden ($1,032,000,000). Sysco also operates SYGMA, a customized distribution network for quick-service restaurant chains generating $8,623,000,000 in revenue.
A severe cyclical downturn in food-away-from-home dining traffic combined with persistent unhedged inbound fuel and wage inflation represents Sysco's primary operational stress scenario. In this event, revenue growth decelerates below 2.50%, and consolidated operating margin contracts from FY2026's 3.66% to below 3.50%. Annual operating cash flow falls below $2,400,000,000 compared to $2,638,000,000 in FY2026, while free cash flow compresses toward $1.5 billion. Simultaneously, higher refinancing yields on Sysco's $14,967,000,000 total debt burden expand WACC from 7.0896% to 8.09%, depressing discounted cash flows. While Sysco's customer diversification across healthcare, educational, and institutional channels provides demand resilience, equity value under these stressed parameters is conditional upon maintaining cost pass-through discipline.
Sysco holds a narrow economic moat grounded in structural cost advantages from route density and procurement scale, reinforced by efficient scale in regional cold-chain distribution. In FY2026, Sysco generated $84,553,000,000 in consolidated revenue, with its flagship U.S. Foodservice Operations contributing $58,803,000,000 (69.5%) in revenue and $3,518,000,000 in operating income at a 5.98% margin. This concentration creates local delivery density that regional competitors cannot duplicate, lowering distribution cost per case.
The company's distribution infrastructure functions as an essential intermediary between thousands of food manufacturers and fragmented foodservice operators. While branded packaged goods suppliers such as CCEP achieve operating margins of 13.40% and gross margins of 35.57%, Sysco operates on high-turnover distributor unit economics with a 3.66% operating margin and an 18.5% . Customers relying on white-glove multi-temperature delivery face meaningful operational switching costs.
The highlighted cell is Fair value when every assumption sits at its base level ($86.19). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $2.2B after modeled reinvestment of $304.1M, with terminal value at 83.0% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to , reinvestment, or resets materially.
Upgrade the rating; Consider expanding position sizing toward upper policy limits if local case volume growth accelerates and operating margin expands.
Because industry-level capacity, supply, lead-time, and capital-intensity benchmarks are unavailable in the source data, the cycle view is demand-led and evidence-limited. Sysco reinvested $700,000,000 in capex in FY2026 against $976,000,000 in depreciation and amortization, maintaining disciplined maintenance capital allocation.7
Bull cycle
Acceleration in consumer food-away-from-home spending boosts restaurant foot traffic and broadline case volume growth, enabling Sysco to leverage warehouse and route density to expand operating margins toward 3.90%.
Bear cycle
Macroeconomic pressures or persistent inflation reduce discretionary restaurant dining, slowing case volume growth below 2.50% and compressing distributor gross margins as unhedged inbound freight costs rise.
§11 Position management
Sizing
3-5%
A 3-5% target weighting is appropriate for Sysco as a defensive mature compounder generating $84.55B revenue and $1.94B in free cash flow, with 11.23% upside to fair value of $86.19, balanced against balance sheet leverage of $14.97B debt.4,6,7
Risk
Risk management focuses on monitoring food-away-from-home customer demand, fuel cost volatility, and refinancing conditions for Sysco's $14,967,000,000 debt load. The position should be sized between 3-5% of total portfolio assets, with regular adherence to quarterly checkpoints governing operating margin, conversion, and domestic share.
Dominant scale in U.S. Foodservice ($58,803,000,000 revenue) and route density sustain a 15.26% ROIC that reliably exceeds the 7.0896% computed WACC.
§14 Final recommendation
Action
Buy
We recommend a Buy rating on Sysco Corporation (SYY) with an intrinsic fair value of $86.19 per share, representing an 11.23% implied upside from $77.49 as of 2026-10-02. Sysco's dominant route density in U.S. Foodservice Operations ($58,803,000,000 FY2026 revenue) and robust $1,938,000,000 free cash flow provide reliable earnings compounding at a 10.09% price discount to intrinsic value.4,6,8
While macroeconomic pressures on restaurant dining foot traffic and debt service on $14,967,000,000 of total debt warrant disciplined monitoring, supply chain productivity improvements and working capital optimization unlocking up to $250,000,000 per inventory day offer tangible support for expansion toward 3.90%.
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Sources
The records this analysis drew on, as they stood when it was run.
Supply chain expenses grew slower than case volume and revenue in FY2026, while advanced forecasting initiatives target up to $250,000,000 in working capital cash release per day of inventory reduction, supporting margin expansion toward 3.90%.5
In the bear case, persistent consumer inflation and restaurant traffic softening curb case volume growth while unhedged inbound fuel and freight costs compress operating margins below 3.50%. Elevated debt service on $14,967,000,000 of total debt restricts free cash flow toward $1.5 billion, and multiple de-rating depresses valuation toward the conditional bear value of $64.74.
Ways this thesis can break
Valuation multiple de-rating due to wholesale distributor margin compression and permanent broadline growth slowdown
Sysco trades at a forward P/E of 15.22x against an assumed terminal P/E of 16.0x. A multiple de-rating toward 12.8x (near peer KDP's forward P/E of 11.98x) reduces discounted terminal equity value.3,4
FV impact
-4.7%
Terminal multiple 20% lower
Trigger
Within 18 months
Sustained higher interest rate environment and debt refinancing yield spike
Sysco carries $14,967,000,000 in total debt with computed WACC of 7.0896%. A 100 bps expansion in WACC to 8.09% driven by refinancing yields on debt maturities impairs discounted equity value.2,4
FV impact
-15.7%
Cost of capital 1 point higher
Trigger
Within 24 months
Early-warning signals to monitor
The five developments that would weaken our investment case.
U.S. Foodservice revenue falling below 65.0% of consolidated revenue signals market share loss in core broadline distribution, diluting route density advantages.
Current:69.5%
Alert if< 65.0%
02
operating_cash_flow
Trailing operating cash flow dropping below $2,400,000,000 indicates supply chain cost inflation and working capital inventory buildup, impairing FCFF conversion.
Current:$2,638,000,000
Alert if< $2,400,000,000
03
international_operating_margin
International operating margin falling below 2.50% confirms structural profitability drag from non-U.S. broadline operations, requiring downward revisions to consolidated EBIT margins.
Current:2.89%
Alert if< 2.50%
04
gross_margin
Gross margin falling below 17.5% signals loss of contract cost-plus markup discipline against upstream food suppliers and unhedged fuel inflation.
Current:18.5%
Alert if< 17.5%
05
operating_margin
Consolidated operating margin dropping below 3.50% demonstrates that route density efficiencies are failing to offset warehouse labor and transportation inflation, threatening baseline operating profit.
Geographic diversification through International Foodservice Operations adds scale across Canada ($6,513,000,000 revenue) and the United Kingdom ($4,487,000,000 revenue). Although international operating margins of 2.89% ($463,000,000 operating income on $16,042,000,000 revenue) currently lag domestic levels, 11 consecutive quarters of double-digit operating income growth reflect progressive operational maturation.
Sysco generates consistent economic profit across business cycles. ROIC of 15.26% exceeds its computed WACC of 7.0896% and cost of equity of 7.9790%, producing an economic spread over 800 basis points. In FY2026, Sysco generated $2,638,000,000 in operating cash flow and $1,938,000,000 in free cash flow on $700,000,000 of capital expenditure, validating durable cash compounding well above its cost of capital.2,6,7
7.5/ 10
Narrow
Sources of advantage
01Distribution Route Density and Inbound Procurement Scale — Sysco's scale across $84,553,000,000 in consolidated revenue and $58,803,000,000 in U.S. Foodservice Operations generates unmatched route clustering, lowering delivery cost per case and securing supplier volume rebates.Wide
02Efficient Scale in Regional Cold-Chain Logistics — Replicating Sysco's nationwide network of temperature-controlled distribution centers and dedicated delivery fleets requires prohibitive capital investment in an industry operating at 3.66% operating margins.Wide
03Switching Costs and Mission-Critical Operational Integration — Independent and chain restaurants depend on Sysco's broadline SKU breadth and delivery reliability, making vendor substitution disruptive to kitchen operations.Moderate
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and at , then adjust for signed per current share.
Under the base case, Sysco compounds steadily as North America's leading broadline foodservice distributor. Core U.S. Foodservice Operations maintain route density and commercial momentum, growing case volumes at 2.5-3.0% annually. Supply chain expense productivity keeps cost inflation below top-line growth, allowing consolidated operating margin to expand from 3.66% to 3.90% by FY2031. Free cash flow conversion remains above $1.9 billion annually, supporting steady dividend growth, balanced reinvestment, and gradual deleveraging toward the base intrinsic fair value of $86.19.5,6
In the bull case, accelerated adoption of inventory forecasting and warehouse automation releases substantial working capital cash, while international foodservice margins converge toward domestic levels. Operating margins surpass 4.00% and EPS compounding accelerates toward 8.5% annually, enabling rapid balance sheet deleveraging, resumption of share repurchases, and multiple expansion toward the upper valuation boundary of $108.90.5
Trigger: Diluted EPS between $1.05 and $1.10, Revenue between $21,543,600,000 and $21,816,765,000
Results aligning with consensus expectations confirm steady 2.5-3.0% volume growth and cost pass-through without altering the baseline compounding trajectory.
Miss
Downgrade the rating; Pause incremental additions, reassess local restaurant dining traffic indicators, and examine inbound freight cost absorption.
Cash flow conversion is robust. FY2026 operating cash flow was $2,638,000,000, while capital expenditures were $700,000,000, yielding free cash flow of $1,938,000,000 and an FCF conversion rate of 110.3% relative to net income of $1,757,000,000. D&A of $976,000,000 exceeds capex, confirming modest maintenance capital intensity.6,7
Management prioritizes debt deleveraging, dividend continuity, and targeted M&A. Sysco holds $1,786,000,000 in cash against $14,967,000,000 in total debt. The company maintains its 57-year track record of dividend increases (Dividend Aristocrat) with an annual dividend run rate of $2.20 per share. Management paused share buybacks to preserve balance sheet strength during pending acquisitions like Restaurant Depot.
Sysco produced $2,638,000,000 in operating cash flow and $1,938,000,000 in free cash flow in FY2026, with inventory forecasting initiatives targeting $250,000,000 of cash unlock per inventory day.
Provides internal liquidity to fund debt service, support dividend growth, and maintain a reinvestment rate of 12% to 15% of NOPAT without dilutive financing.
U.S. Foodservice Operations achieved a 5.98% operating margin ($3,518,000,000 operating income on $58,803,000,000 revenue), while consolidated operating margin was 3.66% on $84,553,000,000 revenue.
The domestic business remains the engine of earnings, absorbing cost pressures from fuel and labor while supporting international expansion.
International Profitability Lag Caps Consolidated Margin Expansion
International Foodservice revenue reached $16,042,000,000, but operating profit of $463,000,000 yielded a 2.89% margin, substantially below domestic profitability.
Until European procurement scale matures, international growth offers top-line diversification but dilutes consolidated margins, capping near-term EBIT margin expansion at 3.70% to 3.90%.
Sysco Corporation (SYY) trades at 15.2x forward earnings against a peer median of 17.6x. Its EV/EBITDA of 11.2x compares with a peer median of 16.4x. The comparison uses 4 peers: Keurig Dr Pepper Inc., Mondelez International Inc., Coca-Cola Europacific Partners PLC and Monster Beverage Corporation, as of 2026-10-03.
Secular trends
Trend
Impact
Note
Shift to Prepared Food and Dining Out
positive
Long-term consumer preference for prepared meals and dining out supports steady baseline broadline volume growth across restaurant and hospitality channels.
Logistics and Cold-Chain Consolidation
positive
Stringent cold-chain regulatory requirements, high warehouse automation costs, and driver availability favor scale players like Sysco with unmatched route density over fragmented regional operators.
Fluctuating diesel fuel prices and carrier freight rates on unhedged inbound transportation present periodic gross marginvolatility.
Positioning
Sysco is the dominant broadline foodservice distributor in North America, with $58,803,000,000 in U.S. Foodservice revenue and $16,042,000,000 in International Foodservice revenue. Its route density, customer breadth across restaurants and institutions, and purchasing scale insulate it from food manufacturer peer models.3,5,8
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Discounted forecast-period cash flows ($21.26) plus discounted terminal value ($104) minus signed net debt per current share ($27.49) equals the $97.82 lens value shown above. Negative net debt is net cash, so subtracting it raises value.
