Value
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.4 |
| P/S | 10.0 |
| EV/EBITDA | 4.8 |
| Fwd P/E | 7.3 |
| PEG | 4.9 |
| Analyst target | 4.0 |
- ▸Forward P/E: 17.1x
- ▸PEG: 1.64
SYY · Why this verdict
Why Sysco (SYY) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.0/10
ConfidenceHIGH
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Price is in momentum continuation with RSI at 69, rising on-balance volume, a bullish MACD, and price above the 200-day moving average, suggesting the trend is supported by buying pressure. Scores | Price remains above the 200-day moving average for at least 6 of the next 9 months and RSI does not fall below 40 on any sustained basis. | →Stable |
| CounterRSI near 70 is close to overbought, and the take-profit level of $78.60 is actually below the current price of $79.69, meaning the risk-reward is already unfavorable even before any pullback. | ||
A debt-to-equity penalty is applied in the scoring with leverage at 6.7x, and free cash flow is only 41% of net income, indicating that reported profits substantially overstate the actual cash retained after debt service and capital expenditures. Quality breakdown | Free cash flow conversion improves to at least 70% of net income within 4 quarters, reducing the gap between reported earnings and actual cash generation. | →Stable |
| CounterSysco's capital structure is intentional for a large distribution business with steady cash flows; high leverage with predictable revenue is standard practice and does not represent unusual distress. | ||
Sysco generates an 82% return on equity, one of the highest in the consumer defensive sector, reflecting the capital-efficient nature of its distribution model and strong operational leverage. Quality breakdown | Return on equity remains above 60% over the next four reported periods, demonstrating that the capital efficiency is structural rather than a temporary benefit of debt-funded buybacks. | →Stable |
| CounterAn 82% return on equity in a food distribution business with a debt-to-equity ratio flagged as a leverage penalty is partly a mathematical artifact of high leverage, not purely operational excellence. | ||
Approximately 60% of revenue flows from restaurant customers, meaning that any contraction in dining activity—from economic recession, consumer trading down, or health trends—would disproportionately impact Sysco's top line. Bear case | Non-restaurant revenue channels grow to more than 45% of total revenue within 12 months, reducing the single-segment dependency below 55%. | →Stable |
| CounterRestaurant concentration in food distribution is a longstanding and stable business model; the 60% figure reflects market leadership rather than dangerous overexposure to a volatile customer segment. | ||
Price is in momentum continuation with RSI at 69, rising on-balance volume, a bullish MACD, and price above the 200-day moving average, suggesting the trend is supported by buying pressure.
→StableScores
- Expectation
- Price remains above the 200-day moving average for at least 6 of the next 9 months and RSI does not fall below 40 on any sustained basis.
CounterRSI near 70 is close to overbought, and the take-profit level of $78.60 is actually below the current price of $79.69, meaning the risk-reward is already unfavorable even before any pullback.
A debt-to-equity penalty is applied in the scoring with leverage at 6.7x, and free cash flow is only 41% of net income, indicating that reported profits substantially overstate the actual cash retained after debt service and capital expenditures.
→StableQuality breakdown
- Expectation
- Free cash flow conversion improves to at least 70% of net income within 4 quarters, reducing the gap between reported earnings and actual cash generation.
CounterSysco's capital structure is intentional for a large distribution business with steady cash flows; high leverage with predictable revenue is standard practice and does not represent unusual distress.
Sysco generates an 82% return on equity, one of the highest in the consumer defensive sector, reflecting the capital-efficient nature of its distribution model and strong operational leverage.
→StableQuality breakdown
- Expectation
- Return on equity remains above 60% over the next four reported periods, demonstrating that the capital efficiency is structural rather than a temporary benefit of debt-funded buybacks.
CounterAn 82% return on equity in a food distribution business with a debt-to-equity ratio flagged as a leverage penalty is partly a mathematical artifact of high leverage, not purely operational excellence.
Approximately 60% of revenue flows from restaurant customers, meaning that any contraction in dining activity—from economic recession, consumer trading down, or health trends—would disproportionately impact Sysco's top line.
→StableBear case
- Expectation
- Non-restaurant revenue channels grow to more than 45% of total revenue within 12 months, reducing the single-segment dependency below 55%.
CounterRestaurant concentration in food distribution is a longstanding and stable business model; the 60% figure reflects market leadership rather than dangerous overexposure to a volatile customer segment.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Sysco's distribution business generates an exceptional 82% return on equity and shows strong price momentum, but nearly exclusive dependence on restaurant customers at 60% of revenue, combined with high debt leverage and a recent earnings miss, creates vulnerability to any slowdown in dining demand.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 5.5 |
| Gross margin | 0.0 |
| Op margin | 1.5 |
| Net margin | 1.0 |
| Current ratio | 5.0 |
| FCF quality | 7.4 |
| Moat | 4.9 |
| Piotroski F | 4.4 |
- ▸Excellent ROE: 82%
- ▸No competitive moat
Growth
1.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.7 |
| EPS growth | 0.0 |
Momentum
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.1 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 7.5 |
| Volume | 3.3 |
- ▸Overbought (RSI 78)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat/negative + RSI 78 (late-cycle distribution risk)
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.0 |
| Analyst rating | 7.3 |
| Price target | 5.4 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider buying — $1,000,035 (0.002% of mkt cap)
Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.2 |
| quality rank | 7.9 |
| growth rank | 5.7 |
- ▸Superior ROE vs peers
Technical
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.0 |
| 52w position | 8.7 |
Risk (lower is worse)
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.9 |
| days to cover | 5.5 |
| volatility | 8.0 |
| put call | 10.0 |
| implied vol | 7.2 |
| beta | 9.2 |
| debt equity | 0.0 |
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 3.8 |
| dividend safety | 5.0 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/0M
- ▸Dividend: 259.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- MOMENTUM:7.0>=5.5
- INSIDER:OK
- EARNINGS_PROXIMITY:25d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.6=NEGATIVE
Warning (2)
- DEATH_CROSS:momentum=7.0>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.59
Upside
-7.7%
Downside
13.1%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 78
EdgeCatalyst-Driven — Earnings in 25d with 3/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 7.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.6=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.59 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 7.0, Risk (lower is worse) at 6.8, and Sentiment at 6.3; the weakest are Growth at 1.9, Technical at 2.9, and Quality at 4.4. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.59 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Return On Equity
Trip ifReturn on equity falls below 50% in at least 2 of the next 4 reported periods, indicating a deterioration of more than 30 percentage points from the current 82% level.
- P2Restaurant Customer Concentration
Trip ifRestaurant segment revenue declines by more than 5% in at least 2 consecutive reported quarters compared to the prior year period.
- P3High Leverage Free Cash Flow Concern
Trip ifFree cash flow conversion falls below 30% of net income for at least 2 consecutive reported quarters, indicating the leverage concern is worsening.
- P4Price Momentum Trend Continuation
Trip ifPrice falls below the 200-day moving average and drops more than 8% from the current level of $79.69 to below $73.32.