Intrinsic value of Sysco - SYY

Previous Close

$51.08

  Intrinsic Value

$81.82

stock screener

  Rating & Target

str. buy

+60%

  Value-price divergence*

+741%

Previous close

$51.08

 
Intrinsic value

$81.82

 
Up/down potential

+60%

 
Rating

str. buy

 
Value-price divergence*

+741%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of SYY stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 27.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.46
  3.50
  3.65
  3.78
  3.91
  4.02
  4.11
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.58
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
Revenue, $m
  50,367
  52,130
  54,033
  56,078
  58,268
  60,608
  63,102
  65,754
  68,570
  71,556
  74,718
  78,063
  81,598
  85,333
  89,274
  93,431
  97,814
  102,433
  107,299
  112,422
  117,815
  123,491
  129,463
  135,745
  142,352
  149,299
  156,603
  164,282
  172,352
  180,835
  189,749
Variable operating expenses, $m
 
  32,939
  34,133
  35,417
  36,792
  38,261
  39,827
  41,492
  43,260
  45,134
  47,119
  49,007
  51,226
  53,571
  56,045
  58,655
  61,407
  64,306
  67,361
  70,577
  73,963
  77,526
  81,275
  85,219
  89,367
  93,728
  98,313
  103,134
  108,201
  113,526
  119,122
Fixed operating expenses, $m
 
  17,547
  17,986
  18,435
  18,896
  19,369
  19,853
  20,349
  20,858
  21,379
  21,914
  22,462
  23,023
  23,599
  24,189
  24,793
  25,413
  26,049
  26,700
  27,367
  28,051
  28,753
  29,472
  30,208
  30,964
  31,738
  32,531
  33,344
  34,178
  35,032
  35,908
Total operating expenses, $m
  48,516
  50,486
  52,119
  53,852
  55,688
  57,630
  59,680
  61,841
  64,118
  66,513
  69,033
  71,469
  74,249
  77,170
  80,234
  83,448
  86,820
  90,355
  94,061
  97,944
  102,014
  106,279
  110,747
  115,427
  120,331
  125,466
  130,844
  136,478
  142,379
  148,558
  155,030
Operating income, $m
  1,851
  1,644
  1,914
  2,225
  2,580
  2,978
  3,422
  3,913
  4,453
  5,042
  5,685
  6,594
  7,349
  8,163
  9,040
  9,983
  10,995
  12,078
  13,238
  14,478
  15,801
  17,212
  18,716
  20,318
  22,022
  23,833
  25,759
  27,803
  29,974
  32,277
  34,719
EBITDA, $m
  2,514
  2,284
  2,569
  2,897
  3,270
  3,688
  4,152
  4,665
  5,227
  5,841
  6,510
  7,234
  8,018
  8,863
  9,772
  10,749
  11,797
  12,918
  14,118
  15,399
  16,767
  18,225
  19,778
  21,431
  23,189
  25,058
  27,043
  29,150
  31,387
  33,759
  36,275
Interest expense (income), $m
  200
  257
  273
  290
  309
  329
  350
  373
  397
  423
  450
  479
  510
  542
  576
  612
  650
  690
  732
  776
  823
  872
  924
  979
  1,036
  1,096
  1,160
  1,227
  1,297
  1,370
  1,448
Earnings before tax, $m
  1,433
  1,387
  1,641
  1,935
  2,271
  2,650
  3,072
  3,540
  4,055
  4,620
  5,235
  6,115
  6,839
  7,621
  8,464
  9,371
  10,345
  11,389
  12,506
  13,701
  14,978
  16,340
  17,792
  19,339
  20,985
  22,737
  24,599
  26,577
  28,677
  30,906
  33,271
Tax expense, $m
  483
  375
  443
  523
  613
  715
  830
  956
  1,095
  1,247
  1,413
  1,651
  1,847
  2,058
  2,285
  2,530
  2,793
  3,075
  3,377
  3,699
  4,044
  4,412
  4,804
  5,221
  5,666
  6,139
  6,642
  7,176
  7,743
  8,345
  8,983
Net income, $m
  950
  1,013
  1,198
  1,413
  1,658
  1,934
  2,243
  2,584
  2,961
  3,372
  3,821
  4,464
  4,993
  5,564
  6,179
  6,841
  7,552
  8,314
  9,129
  10,002
  10,934
  11,928
  12,988
  14,117
  15,319
  16,598
  17,957
  19,401
  20,934
  22,562
  24,288

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,919
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  16,722
  15,631
  16,202
  16,815
  17,472
  18,173
  18,921
  19,716
  20,561
  21,456
  22,404
  23,407
  24,467
  25,587
  26,769
  28,015
  29,330
  30,715
  32,173
  33,710
  35,327
  37,029
  38,819
  40,703
  42,684
  44,767
  46,957
  49,260
  51,680
  54,223
  56,896
Adjusted assets (=assets-cash), $m
  12,803
  15,631
  16,202
  16,815
  17,472
  18,173
  18,921
  19,716
  20,561
  21,456
  22,404
  23,407
  24,467
  25,587
  26,769
  28,015
  29,330
  30,715
  32,173
  33,710
  35,327
  37,029
  38,819
  40,703
  42,684
  44,767
  46,957
  49,260
  51,680
  54,223
  56,896
Revenue / Adjusted assets
  3.934
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
  3.335
Average production assets, $m
  4,112
  4,275
  4,431
  4,598
  4,778
  4,970
  5,174
  5,392
  5,623
  5,868
  6,127
  6,401
  6,691
  6,997
  7,320
  7,661
  8,021
  8,400
  8,798
  9,219
  9,661
  10,126
  10,616
  11,131
  11,673
  12,243
  12,841
  13,471
  14,133
  14,828
  15,559
Working capital, $m
  5,620
  1,877
  1,945
  2,019
  2,098
  2,182
  2,272
  2,367
  2,469
  2,576
  2,690
  2,810
  2,938
  3,072
  3,214
  3,364
  3,521
  3,688
  3,863
  4,047
  4,241
  4,446
  4,661
  4,887
  5,125
  5,375
  5,638
  5,914
  6,205
  6,510
  6,831
Total debt, $m
  7,435
  7,792
  8,288
  8,822
  9,393
  10,004
  10,654
  11,346
  12,081
  12,860
  13,685
  14,557
  15,480
  16,454
  17,482
  18,566
  19,710
  20,915
  22,184
  23,520
  24,927
  26,408
  27,966
  29,605
  31,328
  33,141
  35,046
  37,049
  39,154
  41,367
  43,693
Total liabilities, $m
  13,242
  13,599
  14,095
  14,629
  15,200
  15,811
  16,461
  17,153
  17,888
  18,667
  19,492
  20,364
  21,287
  22,261
  23,289
  24,373
  25,517
  26,722
  27,991
  29,327
  30,734
  32,215
  33,773
  35,412
  37,135
  38,948
  40,853
  42,856
  44,961
  47,174
  49,500
Total equity, $m
  3,480
  2,032
  2,106
  2,186
  2,271
  2,363
  2,460
  2,563
  2,673
  2,789
  2,913
  3,043
  3,181
  3,326
  3,480
  3,642
  3,813
  3,993
  4,183
  4,382
  4,592
  4,814
  5,047
  5,291
  5,549
  5,820
  6,104
  6,404
  6,718
  7,049
  7,396
Total liabilities and equity, $m
  16,722
  15,631
  16,201
  16,815
  17,471
  18,174
  18,921
  19,716
  20,561
  21,456
  22,405
  23,407
  24,468
  25,587
  26,769
  28,015
  29,330
  30,715
  32,174
  33,709
  35,326
  37,029
  38,820
  40,703
  42,684
  44,768
  46,957
  49,260
  51,679
  54,223
  56,896
Debt-to-equity ratio
  2.136
  3.830
  3.940
  4.040
  4.140
  4.230
  4.330
  4.430
  4.520
  4.610
  4.700
  4.780
  4.870
  4.950
  5.020
  5.100
  5.170
  5.240
  5.300
  5.370
  5.430
  5.490
  5.540
  5.590
  5.650
  5.690
  5.740
  5.790
  5.830
  5.870
  5.910
Adjusted equity ratio
  -0.027
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  950
  1,013
  1,198
  1,413
  1,658
  1,934
  2,243
  2,584
  2,961
  3,372
  3,821
  4,464
  4,993
  5,564
  6,179
  6,841
  7,552
  8,314
  9,129
  10,002
  10,934
  11,928
  12,988
  14,117
  15,319
  16,598
  17,957
  19,401
  20,934
  22,562
  24,288
Depreciation, amort., depletion, $m
  663
  640
  655
  672
  690
  709
  730
  751
  774
  799
  825
  640
  669
  700
  732
  766
  802
  840
  880
  922
  966
  1,013
  1,062
  1,113
  1,167
  1,224
  1,284
  1,347
  1,413
  1,483
  1,556
Funds from operations, $m
  1,804
  1,653
  1,853
  2,085
  2,348
  2,643
  2,972
  3,336
  3,735
  4,171
  4,646
  5,104
  5,662
  6,263
  6,911
  7,607
  8,354
  9,154
  10,009
  10,924
  11,900
  12,941
  14,050
  15,230
  16,487
  17,822
  19,241
  20,748
  22,348
  24,044
  25,844
Change in working capital, $m
  -129
  63
  68
  74
  79
  84
  90
  95
  101
  107
  114
  120
  127
  134
  142
  150
  158
  166
  175
  184
  194
  204
  215
  226
  238
  250
  263
  276
  291
  305
  321
Cash from operations, $m
  1,933
  1,589
  1,785
  2,011
  2,269
  2,559
  2,883
  3,240
  3,634
  4,064
  4,532
  4,984
  5,535
  6,129
  6,769
  7,457
  8,196
  8,987
  9,834
  10,739
  11,706
  12,736
  13,835
  15,004
  16,249
  17,572
  18,978
  20,472
  22,057
  23,739
  25,523
Maintenance CAPEX, $m
  0
  -411
  -427
  -443
  -460
  -478
  -497
  -517
  -539
  -562
  -587
  -613
  -640
  -669
  -700
  -732
  -766
  -802
  -840
  -880
  -922
  -966
  -1,013
  -1,062
  -1,113
  -1,167
  -1,224
  -1,284
  -1,347
  -1,413
  -1,483
New CAPEX, $m
  -527
  -163
  -156
  -168
  -180
  -192
  -204
  -217
  -231
  -245
  -259
  -274
  -290
  -306
  -323
  -341
  -359
  -379
  -399
  -420
  -442
  -465
  -490
  -515
  -542
  -570
  -599
  -630
  -662
  -696
  -731
Cash from investing activities, $m
  -601
  -574
  -583
  -611
  -640
  -670
  -701
  -734
  -770
  -807
  -846
  -887
  -930
  -975
  -1,023
  -1,073
  -1,125
  -1,181
  -1,239
  -1,300
  -1,364
  -1,431
  -1,503
  -1,577
  -1,655
  -1,737
  -1,823
  -1,914
  -2,009
  -2,109
  -2,214
Free cash flow, $m
  1,332
  1,015
  1,201
  1,400
  1,630
  1,890
  2,181
  2,505
  2,864
  3,257
  3,686
  4,097
  4,605
  5,154
  5,746
  6,384
  7,070
  7,806
  8,595
  9,439
  10,342
  11,305
  12,332
  13,428
  14,594
  15,835
  17,155
  18,558
  20,048
  21,630
  23,309
Issuance/(repayment) of debt, $m
  -42
  456
  496
  534
  571
  610
  651
  692
  735
  779
  825
  873
  922
  974
  1,028
  1,085
  1,143
  1,205
  1,269
  1,337
  1,407
  1,481
  1,558
  1,639
  1,724
  1,812
  1,905
  2,003
  2,105
  2,213
  2,325
Issuance/(repurchase) of shares, $m
  -1,667
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,706
  456
  496
  534
  571
  610
  651
  692
  735
  779
  825
  873
  922
  974
  1,028
  1,085
  1,143
  1,205
  1,269
  1,337
  1,407
  1,481
  1,558
  1,639
  1,724
  1,812
  1,905
  2,003
  2,105
  2,213
  2,325
Total cash flow (excl. dividends), $m
  -512
  1,472
  1,698
  1,934
  2,201
  2,500
  2,832
  3,197
  3,598
  4,036
  4,511
  4,970
  5,527
  6,128
  6,774
  7,469
  8,214
  9,011
  9,864
  10,776
  11,748
  12,786
  13,890
  15,066
  16,317
  17,647
  19,061
  20,561
  22,154
  23,843
  25,634
Retained Cash Flow (-), $m
  1,780
  -74
  -74
  -80
  -85
  -91
  -97
  -103
  -110
  -116
  -123
  -130
  -138
  -146
  -154
  -162
  -171
  -180
  -190
  -200
  -210
  -221
  -233
  -245
  -258
  -271
  -285
  -299
  -315
  -331
  -347
Prev. year cash balance distribution, $m
 
  1,522
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,919
  1,623
  1,854
  2,116
  2,409
  2,734
  3,094
  3,488
  3,919
  4,388
  4,839
  5,389
  5,982
  6,621
  7,307
  8,043
  8,831
  9,675
  10,576
  11,538
  12,564
  13,658
  14,822
  16,060
  17,377
  18,776
  20,262
  21,839
  23,512
  25,287
Discount rate, %
 
  4.60
  4.83
  5.07
  5.33
  5.59
  5.87
  6.16
  6.47
  6.80
  7.14
  7.49
  7.87
  8.26
  8.67
  9.11
  9.56
  10.04
  10.54
  11.07
  11.62
  12.21
  12.82
  13.46
  14.13
  14.84
  15.58
  16.36
  17.17
  18.03
  18.93
PV of cash for distribution, $m
 
  2,791
  1,477
  1,598
  1,719
  1,835
  1,942
  2,035
  2,112
  2,169
  2,202
  2,186
  2,172
  2,132
  2,066
  1,977
  1,865
  1,736
  1,592
  1,439
  1,279
  1,119
  962
  813
  673
  547
  435
  339
  258
  192
  139
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Sysco Corporation, through its subsidiaries, markets and distributes a range of food and related products primarily to the foodservice or food-away-from-home industry in the United States, Bahamas, Canada, Ireland, Costa Rica, and Mexico. It operates through Broadline, SYGMA, and Other segments. The company distributes a line of frozen foods, such as meats, seafood, fully prepared entrees, fruits, vegetables, and desserts; a line of canned and dry foods; fresh meats and seafood; dairy products; beverage products; imported specialties; and fresh produce. It also supplies various non-food items, including paper products comprising disposable napkins, plates, and cups; tableware consisting of China and silverware; cookware consisting of pots, pans, and utensils; restaurant and kitchen equipment and supplies; and cleaning supplies. In addition, the company offers specialty meat products, such as custom-cut fresh steaks, other meat, and poultry products; and lodging industry products, including personal care guest amenities, equipment, housekeeping supplies, room accessories, and textiles. It serves restaurants, hospitals and nursing homes, schools and colleges, hotels and motels, industrial caterers, and other foodservice venues through 200 distribution facilities. The company was founded in 1969 and is headquartered in Houston, Texas.

FINANCIAL RATIOS  of  Sysco (SYY)

Valuation Ratios
P/E Ratio 30.1
Price to Sales 0.6
Price to Book 8.2
Price to Tangible Book
Price to Cash Flow 14.8
Price to Free Cash Flow 20.3
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -2.9%
Cap. Spend. - 3 Yr. Gr. Rate 0.6%
Financial Strength
Quick Ratio 40
Current Ratio 0
LT Debt to Equity 210.8%
Total Debt to Equity 213.6%
Interest Coverage 8
Management Effectiveness
Return On Assets 6.2%
Ret/ On Assets - 3 Yr. Avg. 6.4%
Return On Total Capital 8.1%
Ret/ On T. Cap. - 3 Yr. Avg. 8.8%
Return On Equity 21.7%
Return On Equity - 3 Yr. Avg. 17.5%
Asset Turnover 2.9
Profitability Ratios
Gross Margin 17.9%
Gross Margin - 3 Yr. Avg. 17.7%
EBITDA Margin 4.6%
EBITDA Margin - 3 Yr. Avg. 4.3%
Operating Margin 3.7%
Oper. Margin - 3 Yr. Avg. 3.2%
Pre-Tax Margin 2.8%
Pre-Tax Margin - 3 Yr. Avg. 2.7%
Net Profit Margin 1.9%
Net Profit Margin - 3 Yr. Avg. 1.8%
Effective Tax Rate 33.7%
Eff/ Tax Rate - 3 Yr. Avg. 34.1%
Payout Ratio 73.6%

SYY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SYY stock intrinsic value calculation we used $50367 million for the last fiscal year's total revenue generated by Sysco. The default revenue input number comes from 2016 income statement of Sysco. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SYY stock valuation model: a) initial revenue growth rate of 3.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.6%, whose default value for SYY is calculated based on our internal credit rating of Sysco, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Sysco.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SYY stock the variable cost ratio is equal to 63.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $17119 million in the base year in the intrinsic value calculation for SYY stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Sysco.

Corporate tax rate of 27% is the nominal tax rate for Sysco. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SYY stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SYY are equal to 8.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Sysco operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SYY is equal to 3.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3480 million for Sysco - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 538.852 million for Sysco is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Sysco at the current share price and the inputted number of shares is $27.5 billion.

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COMPANY NEWS

▶ Houston's second-largest public company names new CEO   [Jul-18-17 09:52AM  American City Business Journals]
▶ Sysco Promotes Tom Bene to Top Job   [09:23AM  TheStreet.com]
▶ Sysco Announces CEO Succession Plan   [04:30PM  GlobeNewswire]
▶ ETFs with exposure to Sysco Corp. : July 14, 2017   [Jul-14-17 05:02PM  Capital Cube]
▶ Sysco Has Upside, According to Analysts   [Jul-07-17 12:28PM  GuruFocus.com]
▶ Sysco Releases Corporate Social Responsibility Report   [Jul-05-17 05:00PM  GlobeNewswire]
▶ Sysco (Not Cisco) Looks Vulnerable to Further Declines   [Jun-28-17 03:49PM  TheStreet.com]
▶ Why BlackBerry, Sysco, and bluebird bio Slumped Today   [Jun-23-17 05:01PM  Motley Fool]
▶ Stocks dip as Amazon-Whole Foods deal hammers grocery stores   [Jun-16-17 03:27PM  Associated Press]
▶ 3 Stocks to Hold for the Next 50 Years   [Jun-01-17 07:50AM  Motley Fool]
▶ Sysco Declares Quarterly Dividend Payment   [May-25-17 05:00PM  GlobeNewswire]
▶ Top Defensive Consumer Stocks for 2017   [06:00AM  Investopedia]
▶ ETFs with exposure to Sysco Corp. : May 23, 2017   [May-23-17 01:07PM  Capital Cube]
▶ Even in faraway US, Indonesian seafood enforcer wins acclaim   [May-13-17 01:26PM  Associated Press]
▶ Story Stocks from Briefing.com   [May-08-17 11:11AM  Briefing.com]
▶ Sysco meets 3Q profit forecasts   [08:28AM  Associated Press]
▶ Sysco Reports Third Quarter Earnings   [08:00AM  GlobeNewswire]
▶ Yacktman Asset Management Comments on Sysco   [May-03-17 12:43PM  GuruFocus.com]
▶ Sysco Corp. Value Analysis (NYSE:SYY) : April 20, 2017   [Apr-20-17 03:19PM  Capital Cube]
▶ Top Insider Buys Highlight for the Week of April 7   [Apr-09-17 03:36PM  GuruFocus.com]
▶ Sysco Corp. Trades Ex-Dividend Wednesday   [Apr-02-17 10:38AM  Investopedia]
▶ Sysco Corp. Trades Ex-Dividend Wednesday   [10:38AM  at Investopedia]
▶ Clash of the Food Service Distribution Titans   [Mar-30-17 10:33AM  Motley Fool]
▶ Clash of the Food Service Distribution Titans   [10:33AM  at Motley Fool]
▶ Clash of the Food Service Distribution Titans   [Mar-27-17 11:01AM  at Motley Fool]
▶ What You Need to Know About This $300 Billion Industry   [Mar-23-17 03:45PM  Motley Fool]
▶ Food distribution giant names ex-Ernst & Young partner to C-suite   [Mar-01-17 04:20PM  at bizjournals.com]
▶ Facing Tightening Labor Market, CIOs Get Creative With Hiring Tactics   [Feb-27-17 03:48PM  at The Wall Street Journal]
▶ Sysco Declares Quarterly Dividend Payment   [Feb-24-17 05:00PM  GlobeNewswire]
▶ Stock Indexes Edge Down   [12:14AM  at The Wall Street Journal]
Stock chart of SYY Financial statements of SYY Annual reports of SYY
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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