Sysco Q1 Earnings Surpass Estimates, Sales Increase 3.2% Y/Y

Sysco Corporation (SYY) kicked off fiscal 2026 on a strong note, with the first quarter reflecting meaningful progress across sales performance, margin management and supply chain operations.The company’s bottom line surpassed estimates, supported by notable strength in its local business. Broadline local operations delivered positive results, showing steady sequential gains, while the U.S. Foodservice (USFS) local segment recorded solid improvement. The USFS local volume growth also significantly outperformed the broader industry traffic trends.Sysco’s performance featured volume gains, another period of gross margin expansion and disciplined cost management — demonstrating the company’s commitment to operational excellence amid a dynamic macroeconomic environment. Management reaffirmed its guidance for fiscal 2026.Closer Look at SYY’s Q1 ResultsSysco’s adjusted earnings of $1.15 per share surpassed the Zacks Consensus Estimate of $1.12. This figure increased 5.5% year over year.Sysco Corporation Price, Consensus and EPS Surprise Sysco Corporation price-consensus-eps-surprise-chart | Sysco Corporation QuoteThe global food product maker and distributor reported sales of $21.1 billion, which moved up 3.2% year over year, and came almost in line with the Zacks Consensus Estimate. Foreign exchange movements boosted the company’s sales by 0.4%. Excluding the impacts of the divested Mexico joint venture, Sysco’s sales grew 3.8%.Sysco’s gross profit rose 3.9% to $3.9 billion, while the gross margin improved by 13 basis points to 18.5%. At the enterprise level, product cost inflation stood at 3.4% due to higher costs in the meat and seafood categories. The gross profit growth was mainly attributed to the company’s effective handling of product cost inflation, along with its prudent sourcing efficiencies. Foreign exchange movements boosted SYY’s gross profit by 0.6%.The company’s operating expenses rose 5.3% year over year to $3.1 billion due to investments in business capacity and sales headcount. Adjusted operating expenses increased 4.3% to $3 billion.Operating income slipped 1% to $800 million, while adjusted operating income inched up 2.9% to $898 million. We note that the adjusted operating margin was almost in line with the year-ago period level at 4.3%. SYY’s adjusted EBITDA came in at $1.1 billion.SYY Provides Insights by SegmentsU.S. Foodservice Operations: Segment performance reflects impacts from slight volume improvement as well as ongoing investments in headcount and capacity. Segment sales rose 2.9% year over year to $14.8 billion in the reported quarter. Total case volume climbed 0.1%, whereas local case volume dipped 0.2%.Gross profit grew 2.8% to $2.8 billion, with the gross margin contracting 3 basis points to 19.1%. Adjusted operating income dipped 1% to $916 million.International Foodservice Operations: The segment performance continued to reflect gains from efficient margin management, growth in local volume and double-digit profit expansion. Sales for the quarter increased 4.5% to $4 billion. On a constant-currency basis, sales rose 2.1% to $3.9 billion. Foreign exchange movements boosted the segment sales by 2.4%. Excluding the impacts of the divested Mexico joint venture, International Foodservice sales grew 7.9%.Gross profit climbed 6.7% to $826 million, with the gross margin improving by 43 basis points to 20.8%. On a constant-currency basis, gross profit increased 3.6% to $802 million. Foreign exchange movements boosted the segment’s gross profit by 3.1%.Adjusted operating income rose 13.1% to $147 million. On a constant-currency basis, adjusted operating income increased 12.3% to $146 million.SYGMA: The segment’s sales were $2,129 million, rising 4.1% year over year.Meanwhile, the Other segment’s sales decreased 3.2% year over year to $273 million.Sysco’s Financial Health SnapshotThis Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $844 million and total liquidity of $3.5 billion.Cash flow from operations amounted to $86 million for the first 13 weeks of fiscal 2026, while the free cash flow amounted to negative $50 million. Capital expenditure, net of proceeds from sales of plant and equipment, was $136 million during this time.In the first quarter of fiscal 2026, Sysco returned $259 million to its shareholders through dividends.SYY’s FY26 OutlookSysco reaffirmed its guidance for fiscal 2026, wherein it expects sales to grow 3-5%. Adjusted earnings per share are projected to increase 1-3%. This guidance includes a headwind of $100 million, or 16 cents per share, related to the prior year’s lower incentive compensation. Excluding this impact, adjusted EPS growth is anticipated to be 5-7%, with the mid-point aligning with the company’s long-term growth targets.SYY shares have lost 2.9% in the past three months compared with the industry’s decline of 7.3%.Some Solid Staple BetsUnited Natural Foods (UNFI) engages in the distribution of natural, organic, specialty, produce and conventional grocery and non-food products. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for United Natural’s current fiscal-year sales and earnings indicates growth of 2.5% and 167.6%, respectively, from the prior-year reported levels. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.Lamb Weston (LW), which engages in the production, distribution and marketing of frozen potato products, currently sports a Zacks Rank of 1.The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales indicates growth of 1.3% from the prior-year reported levels. LW delivered a trailing four-quarter earnings surprise of 16%, on average.Vital Farms (VITL) packages, markets and distributes shell eggs, butter and other products. It flaunts a Zacks Rank #1 at present. VITL delivered a trailing four-quarter earnings surprise of 35.8%, on average.The Zacks Consensus Estimate for Vital Farms’ current fiscal-year sales and earnings implies an increase of 27.2% and 16.1%, respectively, from the prior-year reported levels.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sysco Corporation (SYY): Free Stock Analysis Report United Natural Foods, Inc. (UNFI): Free Stock Analysis Report Lamb Weston (LW): Free Stock Analysis Report Vital Farms, Inc. (VITL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks