Sysco Looks Like a Good Buy

Jul. 6.10 | About: SYSCO Corporation (SYY)

If you're looking for a decent bargain, shares of Sysco (NYSE:SYY) look pretty good now that it's under $29. Thanks to the market's recent unpleasantness, the stock has gotten as low as $28.46.

Sysco is a conservative company. It pays a 25-cent quarterly dividend, so the current yield is about 3.5%, which is well above the 10-year T-bond yield.

Sysco's business had been feeling the squeeze of lower prices. The company saw three straight quarters of declining earnings (not a lot, but declining). It responded by cutting overhead and its earnings started to perk up. Last quarter was interesting because it was the first time since 2008 that sales also grew. That's very good news because you can't cut overhead forever, you need to start growing your sales.

Sysco has now beaten earnings for four straight quarters. Sysco reports late so the next earnings report probably won't come out until around August 10. Plus, Sysco's fiscal year ends on June 30 so this upcoming report will be for its fiscal fourth quarter.

The company will probably earn around 60 cents a share, give or take, which comes out to $1.96 for the year. At $29 a share, that's not bad. I don't expect Sysco to grow its earnings by a lot for their next fiscal year, but it almost certainly should be higher than last year.

Disclosure: No positions