DCF Studio

    SYY · NYQ · Consumer Defensive

    Sysco Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 73.49

    Market price

    USD 79.05

    Implied upside

    -7.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 73.49-7.0%
    Exit multiple
    USD 88.92+12.5%
    Market price
    USD 79.05

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn3bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 87.5bnUSD 90.5bnUSD 93.7bnUSD 96.9bnUSD 100.3bn+3.5%
    EBITUSD 3.4bnUSD 3.5bnUSD 3.6bnUSD 3.8bnUSD 3.9bn+3.5%
    NOPATUSD 2.7bnUSD 2.8bnUSD 2.9bnUSD 3.0bnUSD 3.1bn+3.5%
    Add depreciation & amortisationUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.3bn+3.5%
    Less capital expenditureUSD -882.7mUSD -913.3mUSD -945.0mUSD -977.8mUSD -1.0bn+3.5%
    Less increase in working capitalUSD -419.6mUSD -434.2mUSD -449.2mUSD -464.8mUSD -481.0m+3.5%
    Free cashflow to firmUSD 2.5bnUSD 2.6bnUSD 2.7bnUSD 2.8bnUSD 2.9bn+3.5%
    Discount factor0.96380.89520.83150.77240.7174-
    Present valueUSD 2.4bnUSD 2.3bnUSD 2.2bnUSD 2.1bnUSD 2.0bn-3.9%
    Present Value Of The ForecastUSD 11.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.750Reported 0.627, pulled toward 1.0 (Blume)
    Cost of equity9.12%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 37.9bn71.7% of capital
    Total debtUSD 15.0bn28.3% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.66%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 73.49

    77% of EV

    Forecast FCFF, final year
    USD 2.9bn
    Capex at depreciation, working capital in reinvestment
    USD 3.1bn
    Less reinvestment at g/ROIC (14.5% of NOPAT)
    USD -446.3m
    Capitalised
    USD 2.6bn
    ROIC (reported)
    17.2%
    Terminal value, undiscounted
    USD 52.1bn
    Terminal value, discounted
    USD 37.4bn
    Enterprise value
    USD 48.5bn
    Less net debt
    USD 13.2bn
    Equity value
    USD 35.3bn

    Exit at 12.1x EBITDA

    Value per shareUSD 88.92

    80% of EV

    Terminal value, undiscounted
    USD 62.5bn
    Terminal value, discounted
    USD 44.8bn
    Enterprise value
    USD 55.9bn
    Less net debt
    USD 13.2bn
    Equity value
    USD 42.7bn

    Spread between methods: 19%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.66%107.83119.59135.02156.21187.14
    6.66%82.0388.6796.87107.27120.92
    7.66%64.6168.6773.4979.3186.51
    8.66%52.0654.6757.6961.2265.41
    9.66%42.5844.3246.2948.5451.14

    Outlined: this model. Green text: above today's price of 79.05. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year3.5%5.1%+1.6pp
    EBIT margin3.9%4.1%+0.2pp
    Discount rate7.7%7.4%-0.3pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.