…and why it might be a buying opportunity.
Sysco (SYY)–the food company, not the tech giant–is slipping today after reporting earnings that only met the Street consensus.
Sysco reported a profit of 72 cents a share, in line with analyst forecasts, on sales of $14.4 billion, narrowly beating estimates for $14.34 billion. Still, that wasn’t enough for the market, as share of Sysco have dropped 1.1% to $51.00 at 12:57 p.m. today. The Consumer Staple Select Sector SPDR ETF (XLP) has risen 0.7% to $55.49.
Wells Fargo’s Zachary Fadem writes that he “would use any weakness this morning as a buying opportunity.” He explains why:
We believe FQ4 results serve as further evidence that solid industry trends remain intact, and SYY is transforming its business to drive more efficient operations and improved profitability. While skeptics may point to slower volumes and margin deceleration this quarter, we believe gross profit dollar growth is a much more meaningful metric (and notable positive), and would use any weakness this morning as a buying opportunity. With Tom Bene taking over the CEO helm in January, we believe SYY likely sticks with current practice of providing limited forward commentary this Q. We anticipate more robust FY18 commentary and a new 3-year plan at an investor event this fall, particularly with respect to the go-forward outlook, commentary on margins and an update on Brakes integration progress.