Intrinsic value of Sysco - SYY

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$54.43

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$54.43

 
Intrinsic value

$80.67

 
Up/down potential

+48%

 
Rating

buy

 
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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 29.1

 

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
  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
  2,316
  2,602
  2,932
  3,306
  3,725
  4,191
  4,705
  5,269
  5,886
  6,556
  7,283
  8,068
  8,916
  9,827
  10,807
  11,857
  12,982
  14,184
  15,469
  16,840
  18,301
  19,858
  21,515
  23,277
  25,150
  27,139
  29,252
  31,493
  33,871
  36,392
Interest expense (income), $m
  200
  257
  214
  229
  246
  263
  282
  302
  323
  346
  370
  395
  422
  450
  480
  512
  545
  580
  617
  656
  697
  740
  786
  833
  884
  937
  992
  1,051
  1,112
  1,177
  1,245
Earnings before tax, $m
  1,433
  1,387
  1,700
  1,996
  2,334
  2,715
  3,140
  3,611
  4,129
  4,697
  5,315
  6,199
  6,927
  7,713
  8,560
  9,471
  10,450
  11,498
  12,621
  13,822
  15,104
  16,472
  17,931
  19,484
  21,138
  22,897
  24,766
  26,753
  28,862
  31,100
  33,474
Tax expense, $m
  483
  375
  459
  539
  630
  733
  848
  975
  1,115
  1,268
  1,435
  1,674
  1,870
  2,083
  2,311
  2,557
  2,821
  3,105
  3,408
  3,732
  4,078
  4,447
  4,841
  5,261
  5,707
  6,182
  6,687
  7,223
  7,793
  8,397
  9,038
Net income, $m
  950
  1,013
  1,241
  1,457
  1,704
  1,982
  2,292
  2,636
  3,014
  3,429
  3,880
  4,526
  5,057
  5,631
  6,249
  6,914
  7,628
  8,394
  9,213
  10,090
  11,026
  12,025
  13,089
  14,224
  15,431
  16,715
  18,079
  19,529
  21,069
  22,703
  24,436

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
  13,251
  13,735
  14,255
  14,811
  15,406
  16,040
  16,714
  17,430
  18,189
  18,993
  19,843
  20,742
  21,691
  22,693
  23,750
  24,864
  26,038
  27,275
  28,577
  29,948
  31,391
  32,909
  34,506
  36,185
  37,951
  39,808
  41,759
  43,811
  45,967
  48,233
Adjusted assets (=assets-cash), $m
  12,803
  13,251
  13,735
  14,255
  14,811
  15,406
  16,040
  16,714
  17,430
  18,189
  18,993
  19,843
  20,742
  21,691
  22,693
  23,750
  24,864
  26,038
  27,275
  28,577
  29,948
  31,391
  32,909
  34,506
  36,185
  37,951
  39,808
  41,759
  43,811
  45,967
  48,233
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
  4,275
  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
  6,119
  6,554
  7,022
  7,523
  8,059
  8,629
  9,236
  9,880
  10,563
  11,287
  12,052
  12,861
  13,715
  14,617
  15,568
  16,570
  17,627
  18,740
  19,912
  21,146
  22,445
  23,811
  25,248
  26,759
  28,349
  30,020
  31,776
  33,623
  35,563
  37,603
Total liabilities, $m
  13,242
  11,926
  12,361
  12,829
  13,330
  13,866
  14,436
  15,043
  15,687
  16,370
  17,094
  17,859
  18,668
  19,522
  20,424
  21,375
  22,377
  23,434
  24,547
  25,719
  26,953
  28,252
  29,618
  31,055
  32,566
  34,156
  35,827
  37,583
  39,430
  41,370
  43,410
Total equity, $m
  3,480
  1,325
  1,373
  1,425
  1,481
  1,541
  1,604
  1,671
  1,743
  1,819
  1,899
  1,984
  2,074
  2,169
  2,269
  2,375
  2,486
  2,604
  2,727
  2,858
  2,995
  3,139
  3,291
  3,451
  3,618
  3,795
  3,981
  4,176
  4,381
  4,597
  4,823
Total liabilities and equity, $m
  16,722
  13,251
  13,734
  14,254
  14,811
  15,407
  16,040
  16,714
  17,430
  18,189
  18,993
  19,843
  20,742
  21,691
  22,693
  23,750
  24,863
  26,038
  27,274
  28,577
  29,948
  31,391
  32,909
  34,506
  36,184
  37,951
  39,808
  41,759
  43,811
  45,967
  48,233
Debt-to-equity ratio
  2.136
  4.620
  4.770
  4.930
  5.080
  5.230
  5.380
  5.530
  5.670
  5.810
  5.940
  6.070
  6.200
  6.320
  6.440
  6.550
  6.660
  6.770
  6.870
  6.970
  7.060
  7.150
  7.240
  7.320
  7.400
  7.470
  7.540
  7.610
  7.670
  7.740
  7.800
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
  1,013
  1,241
  1,457
  1,704
  1,982
  2,292
  2,636
  3,014
  3,429
  3,880
  4,526
  5,057
  5,631
  6,249
  6,914
  7,628
  8,394
  9,213
  10,090
  11,026
  12,025
  13,089
  14,224
  15,431
  16,715
  18,079
  19,529
  21,069
  22,703
  24,436
Depreciation, amort., depletion, $m
  663
  672
  689
  707
  726
  747
  769
  792
  817
  843
  871
  688
  719
  752
  787
  824
  862
  903
  946
  991
  1,039
  1,089
  1,142
  1,197
  1,255
  1,316
  1,381
  1,449
  1,520
  1,594
  1,673
Funds from operations, $m
  1,804
  1,685
  1,929
  2,164
  2,430
  2,729
  3,061
  3,428
  3,831
  4,272
  4,751
  5,214
  5,776
  6,383
  7,036
  7,738
  8,491
  9,297
  10,160
  11,081
  12,065
  13,114
  14,231
  15,420
  16,686
  18,031
  19,460
  20,978
  22,589
  24,297
  26,109
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
  1,596
  1,861
  2,090
  2,351
  2,644
  2,971
  3,333
  3,730
  4,164
  4,637
  5,093
  5,649
  6,249
  6,894
  7,588
  8,333
  9,131
  9,984
  10,897
  11,871
  12,909
  14,016
  15,194
  16,448
  17,781
  19,197
  20,702
  22,298
  23,992
  25,788
Maintenance CAPEX, $m
  0
  -442
  -460
  -476
  -494
  -514
  -534
  -556
  -580
  -605
  -631
  -659
  -688
  -719
  -752
  -787
  -824
  -862
  -903
  -946
  -991
  -1,039
  -1,089
  -1,142
  -1,197
  -1,255
  -1,316
  -1,381
  -1,449
  -1,520
  -1,594
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
  -605
  -616
  -644
  -674
  -706
  -738
  -773
  -811
  -850
  -890
  -933
  -978
  -1,025
  -1,075
  -1,128
  -1,183
  -1,241
  -1,302
  -1,366
  -1,433
  -1,504
  -1,579
  -1,657
  -1,739
  -1,825
  -1,915
  -2,011
  -2,111
  -2,216
  -2,325
Free cash flow, $m
  1,332
  991
  1,245
  1,446
  1,677
  1,939
  2,232
  2,559
  2,919
  3,315
  3,747
  4,160
  4,671
  5,223
  5,819
  6,460
  7,150
  7,890
  8,682
  9,530
  10,437
  11,405
  12,437
  13,538
  14,709
  15,956
  17,282
  18,691
  20,188
  21,777
  23,463
Issuance/(repayment) of debt, $m
  -42
  -1,217
  435
  468
  501
  535
  570
  607
  644
  683
  723
  765
  809
  854
  902
  951
  1,003
  1,057
  1,113
  1,172
  1,234
  1,299
  1,366
  1,437
  1,511
  1,589
  1,671
  1,757
  1,846
  1,941
  2,039
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
  -1,217
  435
  468
  501
  535
  570
  607
  644
  683
  723
  765
  809
  854
  902
  951
  1,003
  1,057
  1,113
  1,172
  1,234
  1,299
  1,366
  1,437
  1,511
  1,589
  1,671
  1,757
  1,846
  1,941
  2,039
Total cash flow (excl. dividends), $m
  -512
  -226
  1,680
  1,914
  2,178
  2,474
  2,803
  3,166
  3,563
  3,998
  4,470
  4,926
  5,480
  6,077
  6,720
  7,411
  8,152
  8,946
  9,795
  10,703
  11,671
  12,703
  13,804
  14,975
  16,221
  17,545
  18,953
  20,448
  22,034
  23,717
  25,502
Retained Cash Flow (-), $m
  1,780
  -1,665
  -48
  -52
  -56
  -59
  -63
  -67
  -72
  -76
  -80
  -85
  -90
  -95
  -100
  -106
  -111
  -117
  -124
  -130
  -137
  -144
  -152
  -160
  -168
  -177
  -186
  -195
  -205
  -216
  -227
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
 
  1,929
  1,632
  1,862
  2,122
  2,415
  2,739
  3,098
  3,492
  3,922
  4,390
  4,841
  5,390
  5,982
  6,620
  7,306
  8,041
  8,829
  9,672
  10,572
  11,534
  12,559
  13,652
  14,815
  16,053
  17,369
  18,767
  20,253
  21,829
  23,502
  25,275
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
 
  1,844
  1,485
  1,605
  1,725
  1,840
  1,945
  2,038
  2,114
  2,170
  2,204
  2,186
  2,172
  2,132
  2,066
  1,976
  1,865
  1,736
  1,592
  1,438
  1,279
  1,119
  962
  812
  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 32.1
Price to Sales 0.6
Price to Book 8.8
Price to Tangible Book
Price to Cash Flow 15.8
Price to Free Cash Flow 21.7
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 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 535.188 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 $29.1 billion.


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COMPANY NEWS

▶ 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]
▶ 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]
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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