Intrinsic value of Sysco - SYY

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$52.20

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$52.20

 
Intrinsic value

$263.04

 
Up/down potential

+404%

 
Rating

str. buy

 
Value-price divergence* premium content

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*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 28.1

 

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
  10.70
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.45
  7.21
  6.99
  6.79
  6.61
  6.45
  6.30
  6.17
  6.06
  5.95
  5.86
  5.77
  5.69
  5.62
  5.56
  5.51
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
Revenue, $m
  50,367
  55,756
  61,404
  67,310
  73,472
  79,893
  86,577
  93,528
  100,755
  108,265
  116,069
  124,179
  132,609
  141,374
  150,491
  159,978
  169,855
  180,142
  190,861
  202,037
  213,695
  225,860
  238,562
  251,829
  265,693
  280,185
  295,341
  311,196
  327,787
  345,154
  363,339
Variable operating expenses, $m
 
  35,215
  38,761
  42,468
  46,337
  50,368
  54,564
  58,928
  63,465
  68,179
  73,079
  77,958
  83,250
  88,753
  94,477
  100,432
  106,633
  113,091
  119,820
  126,836
  134,155
  141,792
  149,766
  158,095
  166,798
  175,897
  185,411
  195,365
  205,780
  216,683
  228,099
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
  52,762
  56,747
  60,903
  65,233
  69,737
  74,417
  79,277
  84,323
  89,558
  94,993
  100,420
  106,273
  112,352
  118,666
  125,225
  132,046
  139,140
  146,520
  154,203
  162,206
  170,545
  179,238
  188,303
  197,762
  207,635
  217,942
  228,709
  239,958
  251,715
  264,007
Operating income, $m
  1,851
  2,994
  4,658
  6,406
  8,239
  10,157
  12,160
  14,251
  16,432
  18,706
  21,076
  23,759
  26,336
  29,023
  31,826
  34,753
  37,809
  41,002
  44,341
  47,834
  51,488
  55,315
  59,324
  63,526
  67,931
  72,551
  77,399
  82,487
  87,829
  93,438
  99,331
EBITDA, $m
  2,514
  3,698
  5,411
  7,212
  9,099
  11,073
  13,136
  15,288
  17,533
  19,873
  22,312
  24,854
  27,505
  30,269
  33,153
  36,163
  39,307
  42,591
  46,024
  49,615
  53,373
  57,307
  61,428
  65,746
  70,273
  75,021
  80,003
  85,231
  90,719
  96,482
  102,535
Interest expense (income), $m
  200
  257
  243
  288
  336
  385
  436
  490
  546
  604
  664
  726
  791
  859
  929
  1,002
  1,078
  1,157
  1,239
  1,325
  1,414
  1,508
  1,605
  1,707
  1,813
  1,924
  2,040
  2,162
  2,289
  2,421
  2,560
Earnings before tax, $m
  1,433
  2,737
  4,414
  6,118
  7,903
  9,772
  11,724
  13,761
  15,887
  18,103
  20,413
  23,033
  25,545
  28,164
  30,897
  33,751
  36,731
  39,846
  43,102
  46,509
  50,074
  53,808
  57,719
  61,819
  66,118
  70,627
  75,358
  80,325
  85,540
  91,017
  96,771
Tax expense, $m
  483
  739
  1,192
  1,652
  2,134
  2,638
  3,165
  3,716
  4,289
  4,888
  5,511
  6,219
  6,897
  7,604
  8,342
  9,113
  9,917
  10,758
  11,638
  12,557
  13,520
  14,528
  15,584
  16,691
  17,852
  19,069
  20,347
  21,688
  23,096
  24,575
  26,128
Net income, $m
  950
  1,998
  3,223
  4,466
  5,769
  7,133
  8,558
  10,046
  11,597
  13,215
  14,901
  16,814
  18,648
  20,560
  22,555
  24,638
  26,814
  29,087
  31,464
  33,951
  36,554
  39,279
  42,135
  45,128
  48,266
  51,558
  55,012
  58,637
  62,444
  66,442
  70,643

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
  14,173
  15,609
  17,110
  18,676
  20,308
  22,007
  23,774
  25,611
  27,520
  29,504
  31,566
  33,708
  35,937
  38,254
  40,666
  43,176
  45,791
  48,516
  51,357
  54,320
  57,412
  60,641
  64,013
  67,538
  71,221
  75,074
  79,104
  83,322
  87,736
  92,359
Adjusted assets (=assets-cash), $m
  12,803
  14,173
  15,609
  17,110
  18,676
  20,308
  22,007
  23,774
  25,611
  27,520
  29,504
  31,566
  33,708
  35,937
  38,254
  40,666
  43,176
  45,791
  48,516
  51,357
  54,320
  57,412
  60,641
  64,013
  67,538
  71,221
  75,074
  79,104
  83,322
  87,736
  92,359
Revenue / Adjusted assets
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
  3.934
Average production assets, $m
  4,112
  4,572
  5,035
  5,519
  6,025
  6,551
  7,099
  7,669
  8,262
  8,878
  9,518
  10,183
  10,874
  11,593
  12,340
  13,118
  13,928
  14,772
  15,651
  16,567
  17,523
  18,521
  19,562
  20,650
  21,787
  22,975
  24,218
  25,518
  26,879
  28,303
  29,794
Working capital, $m
  5,620
  2,007
  2,211
  2,423
  2,645
  2,876
  3,117
  3,367
  3,627
  3,898
  4,178
  4,470
  4,774
  5,089
  5,418
  5,759
  6,115
  6,485
  6,871
  7,273
  7,693
  8,131
  8,588
  9,066
  9,565
  10,087
  10,632
  11,203
  11,800
  12,426
  13,080
Total debt, $m
  7,435
  6,949
  8,241
  9,592
  11,002
  12,471
  14,000
  15,590
  17,243
  18,961
  20,747
  22,602
  24,531
  26,536
  28,622
  30,792
  33,051
  35,405
  37,857
  40,414
  43,081
  45,864
  48,770
  51,805
  54,977
  58,292
  61,760
  65,387
  69,182
  73,156
  77,316
Total liabilities, $m
  13,242
  12,756
  14,048
  15,399
  16,809
  18,278
  19,807
  21,397
  23,050
  24,768
  26,554
  28,409
  30,338
  32,343
  34,429
  36,599
  38,858
  41,212
  43,664
  46,221
  48,888
  51,671
  54,577
  57,612
  60,784
  64,099
  67,567
  71,194
  74,989
  78,963
  83,123
Total equity, $m
  3,480
  1,417
  1,561
  1,711
  1,868
  2,031
  2,201
  2,377
  2,561
  2,752
  2,950
  3,157
  3,371
  3,594
  3,825
  4,067
  4,318
  4,579
  4,852
  5,136
  5,432
  5,741
  6,064
  6,401
  6,754
  7,122
  7,507
  7,910
  8,332
  8,774
  9,236
Total liabilities and equity, $m
  16,722
  14,173
  15,609
  17,110
  18,677
  20,309
  22,008
  23,774
  25,611
  27,520
  29,504
  31,566
  33,709
  35,937
  38,254
  40,666
  43,176
  45,791
  48,516
  51,357
  54,320
  57,412
  60,641
  64,013
  67,538
  71,221
  75,074
  79,104
  83,321
  87,737
  92,359
Debt-to-equity ratio
  2.136
  4.900
  5.280
  5.610
  5.890
  6.140
  6.360
  6.560
  6.730
  6.890
  7.030
  7.160
  7.280
  7.380
  7.480
  7.570
  7.660
  7.730
  7.800
  7.870
  7.930
  7.990
  8.040
  8.090
  8.140
  8.180
  8.230
  8.270
  8.300
  8.340
  8.370
Adjusted equity ratio
  -0.027
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  950
  1,998
  3,223
  4,466
  5,769
  7,133
  8,558
  10,046
  11,597
  13,215
  14,901
  16,814
  18,648
  20,560
  22,555
  24,638
  26,814
  29,087
  31,464
  33,951
  36,554
  39,279
  42,135
  45,128
  48,266
  51,558
  55,012
  58,637
  62,444
  66,442
  70,643
Depreciation, amort., depletion, $m
  663
  704
  754
  806
  860
  917
  976
  1,037
  1,101
  1,167
  1,236
  1,095
  1,169
  1,247
  1,327
  1,411
  1,498
  1,588
  1,683
  1,781
  1,884
  1,991
  2,103
  2,220
  2,343
  2,470
  2,604
  2,744
  2,890
  3,043
  3,204
Funds from operations, $m
  1,804
  2,702
  3,976
  5,272
  6,629
  8,050
  9,534
  11,083
  12,698
  14,382
  16,137
  17,909
  19,817
  21,806
  23,882
  26,049
  28,311
  30,676
  33,147
  35,733
  38,438
  41,271
  44,238
  47,348
  50,608
  54,028
  57,616
  61,381
  65,334
  69,486
  73,846
Change in working capital, $m
  -129
  194
  203
  213
  222
  231
  241
  250
  260
  270
  281
  292
  303
  316
  328
  342
  356
  370
  386
  402
  420
  438
  457
  478
  499
  522
  546
  571
  597
  625
  655
Cash from operations, $m
  1,933
  2,483
  3,773
  5,059
  6,407
  7,819
  9,293
  10,832
  12,438
  14,111
  15,856
  17,617
  19,513
  21,491
  23,554
  25,707
  27,956
  30,305
  32,761
  35,330
  38,018
  40,833
  43,781
  46,870
  50,109
  53,506
  57,070
  60,811
  64,737
  68,861
  73,192
Maintenance CAPEX, $m
  0
  -442
  -492
  -541
  -593
  -648
  -704
  -763
  -825
  -888
  -955
  -1,023
  -1,095
  -1,169
  -1,247
  -1,327
  -1,411
  -1,498
  -1,588
  -1,683
  -1,781
  -1,884
  -1,991
  -2,103
  -2,220
  -2,343
  -2,470
  -2,604
  -2,744
  -2,890
  -3,043
New CAPEX, $m
  -527
  -460
  -463
  -484
  -505
  -527
  -548
  -570
  -593
  -616
  -640
  -665
  -691
  -719
  -748
  -778
  -810
  -844
  -879
  -916
  -956
  -998
  -1,042
  -1,088
  -1,137
  -1,188
  -1,243
  -1,300
  -1,360
  -1,424
  -1,491
Cash from investing activities, $m
  -601
  -902
  -955
  -1,025
  -1,098
  -1,175
  -1,252
  -1,333
  -1,418
  -1,504
  -1,595
  -1,688
  -1,786
  -1,888
  -1,995
  -2,105
  -2,221
  -2,342
  -2,467
  -2,599
  -2,737
  -2,882
  -3,033
  -3,191
  -3,357
  -3,531
  -3,713
  -3,904
  -4,104
  -4,314
  -4,534
Free cash flow, $m
  1,332
  1,581
  2,818
  4,033
  5,309
  6,644
  8,041
  9,499
  11,020
  12,607
  14,261
  15,929
  17,727
  19,603
  21,560
  23,602
  25,735
  27,964
  30,294
  32,731
  35,281
  37,951
  40,748
  43,679
  46,752
  49,975
  53,357
  56,906
  60,633
  64,546
  68,657
Issuance/(repayment) of debt, $m
  -42
  -387
  1,292
  1,351
  1,410
  1,469
  1,529
  1,590
  1,653
  1,718
  1,785
  1,855
  1,929
  2,005
  2,086
  2,170
  2,259
  2,353
  2,452
  2,557
  2,667
  2,783
  2,906
  3,035
  3,172
  3,316
  3,467
  3,627
  3,796
  3,973
  4,160
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
  -387
  1,292
  1,351
  1,410
  1,469
  1,529
  1,590
  1,653
  1,718
  1,785
  1,855
  1,929
  2,005
  2,086
  2,170
  2,259
  2,353
  2,452
  2,557
  2,667
  2,783
  2,906
  3,035
  3,172
  3,316
  3,467
  3,627
  3,796
  3,973
  4,160
Total cash flow (excl. dividends), $m
  -512
  1,193
  4,110
  5,384
  6,718
  8,113
  9,570
  11,089
  12,674
  14,325
  16,047
  17,784
  19,656
  21,608
  23,645
  25,773
  27,995
  30,318
  32,746
  35,288
  37,948
  40,734
  43,654
  46,714
  49,924
  53,291
  56,824
  60,533
  64,428
  68,519
  72,817
Retained Cash Flow (-), $m
  1,780
  -1,757
  -144
  -150
  -157
  -163
  -170
  -177
  -184
  -191
  -198
  -206
  -214
  -223
  -232
  -241
  -251
  -261
  -272
  -284
  -296
  -309
  -323
  -337
  -352
  -368
  -385
  -403
  -422
  -441
  -462
Prev. year cash balance distribution, $m
 
  3,820
  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
 
  3,256
  3,967
  5,234
  6,562
  7,950
  9,400
  10,913
  12,490
  14,134
  15,848
  17,578
  19,441
  21,385
  23,414
  25,532
  27,744
  30,056
  32,474
  35,004
  37,652
  40,425
  43,331
  46,377
  49,571
  52,922
  56,439
  60,130
  64,007
  68,078
  72,355
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
 
  3,113
  3,610
  4,512
  5,332
  6,057
  6,675
  7,179
  7,562
  7,821
  7,955
  7,939
  7,835
  7,620
  7,307
  6,906
  6,435
  5,909
  5,345
  4,761
  4,175
  3,601
  3,053
  2,542
  2,078
  1,666
  1,309
  1,006
  757
  556
  398
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 30.7
Price to Sales 0.6
Price to Book 8.4
Price to Tangible Book
Price to Cash Flow 15.1
Price to Free Cash Flow 20.8
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 10.7% 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 9.3 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 539.099 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 $28.1 billion.


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COMPANY NEWS

▶ 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]
▶ Stocks Inch Lower, Yields Fall   [05:03PM  at The Wall Street Journal]
▶ [$$] Sysco Earnings Beat Expectations   [01:35PM  at The Wall Street Journal]
▶ Sysco Reports Second Quarter Earnings   [08:00AM  GlobeNewswire]
▶ U.S. FTC Chairwoman Ramirez to step down   [Jan-13-17 11:31AM  Reuters]
▶ [$$] Phyllis Sewell Proved an Accidental Role Model for Female Executives   [Jan-06-17 11:30PM  at The Wall Street Journal]
▶ [$$] Phyllis Sewell Proved an Accidental Role Model for Women   [10:00AM  at The Wall Street Journal]
▶ The Best Dividend Aristocrats of 2016   [Dec-13-16 11:37AM  at Motley Fool]
▶ A Second Chance for Sysco-US Foods?   [07:30AM  at Bloomberg]
▶ Is Royal Bank of Scotland Group PLC (RBS) A Good Stock To Buy?   [Dec-11-16 05:39AM  at Insider Monkey]
▶ How Credit Suisse Group AG (ADR) (CS) Stacks Up Against Its Peers   [Dec-10-16 02:46PM  at Insider Monkey]
▶ Why Sysco Corp. Stock Jumped 10.7% in November   [Dec-09-16 04:35PM  at Motley Fool]
Stock chart of SYY Financial statements 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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