Sysco's Q4 Earnings Top Expectations, Shares Decline Despite Modest Growth Outlook

Sysco Corporation's Q4 2025 earnings surpassed expectations with $1.48 EPS and $21.1 billion sales. However, a goodwill impairment charge led to a 13% earnings decline YoY. CEO Kevin Hourican forecasts 3-5% sales growth for FY26 and 1-3% earnings growth. The stock is currently fairly valued with a GF Value of $82.86 and a dividend yield of 2.68%. Despite some financial challenges, Sysco's strong market position and revenue growth provide a solid foundation for future performance.

Sysco Corporation (SYY) reported its fourth-quarter 2025 earnings, meeting Wall Street expectations with an adjusted EPS of $1.48, compared to the forecasted $1.39. The company also exceeded revenue projections, reporting $21.14 billion against an anticipated $21 billion. Despite these positive results, Sysco’s stock declined by 1.94% in pre-market trading, closing at $79 per share, reflecting investor concerns over broader market trends and future guidance.

Key Takeaways

Sysco’s Q4 revenue grew by 2.8% year-over-year to $21.1 billion. Adjusted EPS rose by 6.5% to $1.48, beating forecasts by 6.47%. The company plans to increase its sales force by 4% in FY 2026. Sysco’s stock fell by 1.94% in pre-market trading despite earnings beat. Full-year sales growth guidance is set at 3% to 5%. Company Performance

Sysco demonstrated solid performance in Q4 2025, with significant growth in both revenue and earnings per share. The company’s international segment continues to show strength, marking seven consecutive quarters of double-digit operating income growth. Sysco’s diversified portfolio, with two-thirds of its business in restaurants and one-third in recession-resilient sectors, provides strategic stability amid fluctuating market conditions. Financial Highlights

Revenue: $21.1 billion, up 2.8% year-over-year Adjusted Operating Income: $1.1 billion, up 1.1% Adjusted EPS: $1.48, up 6.5% Operating Cash Flow: $2.5 billion Free Cash Flow: $1.8 billion Earnings vs. Forecast

Sysco’s Q4 earnings exceeded expectations, with an EPS of $1.48 compared to the forecasted $1.39, marking a 6.47% surprise. Revenue also surpassed estimates, coming in at $21.14 billion against a $21 billion forecast, reflecting a 0.67% surprise. This performance aligns with the company’s historical trend of meeting or exceeding earnings projections. Market Reaction

Despite beating earnings expectations, Sysco’s stock fell by 1.94% in pre-market trading, closing at $79. This decline may be attributed to broader market concerns and cautious investor sentiment regarding future guidance. The stock remains below its 52-week high of $82.23 but above its 52-week low of $67.12. InvestingPro analysis suggests the stock is currently undervalued, with analyst targets ranging from $74 to $93 per share. Get access to detailed valuation metrics and 8 additional exclusive ProTips about Sysco through InvestingPro’s comprehensive research platform. Outlook & Guidance

Sysco projects full-year net sales growth of 3% to 5%, reaching $84 billion to $85 billion. The company expects adjusted EPS for the full year to range between $4.50 and $4.60, indicating 1% to 3% growth. Strategic initiatives include launching a new customer loyalty program, AI-powered CRM tools, and expanding supply chain capacity. Executive Commentary

CEO Kevin Herkin emphasized Sysco’s resilience in the food service sector, stating, "Food away from home is a good business. It takes share from the grocery channel every year." CFO Kenny Chao highlighted operational improvements, saying, "The faucet is turning on right now," reflecting confidence in ongoing growth and profitability. Risks and Challenges

Market Saturation: Potential slowdowns in restaurant industry traffic could impact sales. Supply Chain Issues: Ongoing global disruptions pose risks to inventory and delivery timelines. Macroeconomic Pressures: Inflation and economic uncertainty may affect consumer spending. Labor Costs: Increasing wages and retention efforts could pressure margins. Competition: Intensified competition in the foodservice distribution market could impact market share. Q&A

During the earnings call, analysts focused on sales force retention and productivity, the role of AI in improving sales efficiency, and potential industry consolidation. Sysco executives reassured investors of minimal risk from restaurant closures and emphasized their strategy to achieve profitable market share gains. Full transcript - Sysco Corporation (SYY) Q4 2025: Operator/Moderator: Welcome to Cisco’s Fourth Quarter Fiscal Year twenty twenty five Conference Call. As a reminder, today’s call is being recorded. We will begin with opening remarks and introductions. I would now like to turn the call over to Kevin Kim, Vice President of Investor Relations. Sir, you may begin. Kevin Kim, Vice President of Investor Relations, Sysco: Good morning, everyone, and welcome to Sysco’s fourth quarter fiscal year twenty twenty five earnings call. On today’s call, we have Kevin Herkin, our Chair of the Board and CEO and Kenny Chao, our CFO. Before we begin, please note that statements made during this presentation that state the company’s or management’s intentions, beliefs, expectations or predictions of the future are forward looking statements within the meaning of the Private Securities Litigation Reform Act, and actual results could differ in a material manner. Additional information about factors that could cause results to differ from those in the forward looking statements is contained in the company’s SEC filings. This includes, but is not limited to, risk factors contained in our annual report on Form 10 ks for the year ended 06/29/2024, subsequent SEC filings and in the news release issued earlier this morning. A copy of these materials can be found in the Investors section at cisco.com. Non GAAP financial measures are included in our comments today and in our presentation slides. The reconciliation of these non GAAP measures to the corresponding GAAP measures is included at the end of the presentation slides and can be found in the Investors section of our website. During the discussion today, unless otherwise stated, all results are compared to the same quarter in the prior year. At this time, I’d like to turn the call over to Kevin Harkin. Kevin Herkin, Chair of the Board and CEO, Sysco: Good morning, everyone. We appreciate you joining our call this morning. Today, we will recap our fourth quarter performance, highlight our full year 2025 outcomes, provide an update on key initiatives that will drive our momentum in the new fiscal year and finally, Kenny will share our view on our guidance for fiscal year twenty twenty six. Let’s get started with a highlight of our fourth quarter financial outcomes. We are pleased to report that our fourth quarter adjusted results exceeded our expectations. Traffic to restaurants improved throughout the quarter and Sysco specific initiatives delivered improved financial outcomes top to bottom. The progress accelerated throughout the quarter and has continued into July for Sysco. All considered, Q4 was a relatively steady quarter from the perspective of restaurant foot traffic. On a monthly basis, April traffic trends for the industry were down 1.5%, May was down 1% and June was down approximately 0.9. The quarter overall was down 1.1%, which represented approximately 190 basis points of improvement versus Q3’s traffic level of down 3%. It is good to see the industry stabilizing after a rocky start to the calendar year. I’ll now pivot to Sysco’s results for the quarter. As you can see on Slide four, we delivered sales results of $21,100,000,000 up 2.8% on a reported basis and up 3.7% to last year when excluding the divestiture of our Mexican business. We delivered adjusted operating income of $1,100,000,000 up 1.1% to last year and adjusted EPS growth of $1.48 up 6.5% relative to last year. Importantly, we made solid progress on our $100,000,000 profit improvement target with a strong contribution in Q4 from our strategic sourcing efforts. Our international segment posted another compelling quarter with 3.6% top line growth on a reported basis and up 8.3% to last year when excluding the divestiture of Mexico. International posted strong local case growth of plus 4% in the quarter. Adjusted operating income increased 20.1%, representing the seventh consecutive quarter of double digit profit growth. Strength was delivered from across all international geographies with notable strong performances from Canada, Great Britain, Ireland and Latin America. We expect a continuation of strong international financial performance in fiscal twenty twenty six. Within USFS, our national sales business delivered 1.3% volume growth for the quarter. Unpacking those results further, our non commercial national business continues to perform at a very high level with strength in food service management, education and travel and leisure. Most importantly, gross profit within national sales grew almost three times faster than volume due to the excellent efforts by the team to improve profitability of the national business. The strong profit improvement was delivered through customer optimization and the creation of win win provisions in our contracts that motivate customers to partner with Cisco to optimize efficiency. Our Cigna segment delivered sales growth of 5.9% for the quarter, driven by strong customer wins versus prior year. For the year, Sigma grew top line 8.3% and bottom line 12.5. It was a record year for our Sigma business from top and a bottom line perspective. It is important to note that the Sigma top line growth rates will begin to moderate in the coming year as we begin to lap