Sysco (SYY) Margin Compression To 2.2% Tests Bullish Earnings Quality Narrative

Simply Wall St.01-29

Sysco (SYY) has put up another quarter of solid scale, with Q2 2026 revenue of about US$20.8b, basic EPS of US$0.81 and net income excluding extra items of US$389m, while the trailing twelve months ...

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Over the last six reported quarters, revenue has ranged between about US$19.6b and US$21.1b, while quarterly EPS has moved between roughly US$0.81 and US$1.10. This sets the backdrop for a story that hinges on how much...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"LU0648000940.SGD":"Natixis Harris Associates Global Equity RA SGD","LU1894683348.USD":"AMUNDI FUNDS US EQUITY RESEARCH VALUE \"A2\" (USD) INC","BK4504":"桥水持仓","LU1989763690.USD":"东方汇理世代食品基金A2 Acc","LU2211817866.USD":"Allianz Food Security AT Acc USD","BK4102":"食品分销商","SYY":"西思科公司","LU0130103400.USD":"Natixis Harris Associates Global Equity RA USD","BK4588":"碎股","BK4585":"ETF&股票定投概念","LU1989763427.SGD":"CPR Invest - Food For Generations A2 Acc SGD-H","LU1894683264.USD":"AMUNDI FUNDS US EQUITY RESEARCH VALUE \"A2\" (USD) ACC","BK4112":"金融交易所和数据","LU1201861165.SGD":"Natixis Harris Associates Global Equity PA SGD","LU0477156797.USD":"HARRIS ASSOCIATES GLOBAL EQUITY \"RE\" (USD) ACC","IE00B3T34201.USD":"BNY MELLON GLOBAL EQUITY INCOME \"B\" (USD) INC","LU0130518102.USD":"HARRIS ASSOCIATES GLOBAL EQUITY \"R\" INC"},"translate_title":"Sysco(SYY)利润率压缩至2.2%考验看涨盈利质量叙事","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SYY":1.98},"content_text":"Sysco (SYY) has put up another quarter of solid scale, with Q2 2026 revenue of about US$20.8b, basic EPS of US$0.81 and net income excluding extra items of US$389m, while the trailing twelve months show revenue of roughly US$82.6b, EPS of US$3.73 and net income of US$1.80b. Over the last six reported quarters, revenue has ranged between about US$19.6b and US$21.1b, while quarterly EPS has moved between roughly US$0.81 and US$1.10. This sets the backdrop for a story that hinges on how much earnings power Sysco can keep converting from its massive sales base. With margins running tight and growth forecasts relatively measured, this set of results puts the focus squarely on how efficiently the business can turn volume into lasting profitability. See our full analysis for Sysco. With the latest numbers on the table, the next step is to weigh them against the prevailing stories around Sysco, looking at where the data backs the common narratives and where it starts to push back. Curious how numbers become stories that shape markets? Explore Community Narratives NYSE:SYY Earnings & Revenue History as at Jan 2026 AdvertisementTTM margins hold at 2.2%  Over the trailing twelve months, Sysco converted US$82.6b of revenue into US$1.80b of net income excluding extra items, which works out to a 2.2% net profit margin compared with 2.4% in the prior year period cited in the analysis. What stands out for the bullish view that Sysco is a dependable foodservice backbone is that this 2.2% margin sits on top of large scale revenue of US$82.6b. Even small shifts in margin can move absolute profit, yet recent quarterly net income has stayed in a fairly tight band, from US$389 million in Q2 2026 to US$531 million in Q4 2025.\n     Bulls pointing to high earnings quality over the last 12 months can lean on that consistency across six quarters, where revenue ranged from about US$19.6b to US$21.1b and net income excluding extra items stayed between US$389 million and US$531 million. At the same time, the slight margin move from 2.4% to 2.2% gives bullish investors something to watch, because it shows how sensitive profitability can be when operating on thin distribution margins.    Debt coverage flagged as a key risk  The risk summary highlights that debt is not well covered by operating cash flow over the last 12 months, even though the business generated US$1.80b of net income and maintained that 2.2% net margin. Critics highlight this debt coverage issue as a central bearish concern, because it sits alongside only modest growth expectations, with revenue forecast at about 3.9% per year and earnings at 9.16% per year, both below the US market averages cited in the analysis.\n     For a bearish lens, that combination of moderate forecast growth and weaker cash coverage of debt means leverage could matter more if margins stay close to 2.2% rather than moving higher. On the other hand, the company’s record of 5 year earnings growth averaging about 30.5% per year gives bears a data point they need to weigh carefully against the more cautious forward growth forecasts.    Have a closer look at how these leverage and growth trade offs fit into the cautious case around Sysco before you decide what they mean for you. 🐻 Sysco Bear Case P/E, DCF fair value and a 2.59% yield  Sysco is described as trading on a 22x P/E, below the peer average of 35.7x and roughly in line with the US Consumer Retailing industry at 21.8x. A cited DCF fair value of about US$157.99 sits well above the current share price of US$83.51 and the analysis also points to a 2.59% dividend yield. What is interesting for a generally supportive narrative is how this mix of valuation and income signals stacks up against the modest growth profile, since the shares are framed as materially below the DCF fair value, on a P/E below peers, and at the same time supported by that 2.59% dividend that was paid alongside trailing twelve month net income of US$1.80b on US$82.6b of revenue.\n     Supporters of a more optimistic angle often focus on that gap between the market price of US$83.51 and the DCF fair value of about US$157.99, together with the below peer P/E, as signs that the stock could be priced conservatively relative to its earnings base. They also point to the reliable dividend yield figure as evidence that recent earnings power is being returned to shareholders, although the same dataset reminds investors that future revenue and earnings growth are forecast below the broader US market averages.    Curious how these valuation gaps and income signals fit into a bigger story about Sysco’s future? 📊 Read the full Sysco Consensus Narrative.  Next Steps Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Sysco's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move. See What Else Is Out There Sysco’s thin 2.2% net margin, modest growth forecasts and flagged debt coverage concern show that earnings power rests on a relatively tight financial cushion. If you want businesses where leverage looks less like a swing factor, use our solid balance sheet and fundamentals stocks screener (386 results) to focus on companies with stronger cash coverage and sturdier balance sheets.  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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