Since July 2025, Sysco has been in a holding pattern, floating around $78.80. The stock also fell short of the S&P 500’s 10% gain during that period.
Is there a buying opportunity in Sysco, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Sysco Will Underperform?
We're cautious about Sysco. Here are three reasons you should be careful with SYY and a stock we'd rather own.
1. Weak Sales Volumes Indicate Waning Demand
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful Distributors company because there’s a ceiling to what customers will pay.
Over the last two years, Sysco’s units sold averaged 1.4% year-on-year growth. This performance was underwhelming and suggests it might have to lower prices or invest in product improvements to accelerate growth, factors that can hinder near-term profitability. 
2. Projected Free Cash Flow Gains to Pump Profits
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Over the next year, analysts predict Sysco’s cash conversion will slightly improve. Their consensus estimates imply its free cash flow margin of 1.9% for the last 12 months will increase to 3.1%, it options for capital deployment (investments, share buybacks, etc.).
3. New Investments Bear Fruit as ROIC Jumps
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Sysco’s ROIC averaged 1.8 percentage point increases each year. This is a good sign, and we hope the company can continue improving.
Final Judgment
Sysco doesn’t pass our quality test. With its shares trailing the market in recent months, the stock trades at 17× forward P/E (or $78.80 per share). This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are better investments elsewhere. Let us point you toward one of our top digital advertising picks.
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