United Natural Foods, Inc. (UNFI), The Hain Celestial Group, Inc. (HAIN): Don’t Underestimate SYSCO Corporation (SYY)

Recent performance and strategic initiatives

In fiscal year 2013, Sysco’s sales jumped 4.8% to $44.4 billion. On the surface, this is very impressive, especially considering the current economic environment and industry in which Sysco operates. This sales increase was mostly due to product cost inflation, higher selling prices, and sales from the company’s 14 acquired companies in FY 2013. That said, excluding acquisitions, sales still improved 1.3%.

Diluted EPS plummeted 12.1% for the year to $1.67. Sysco plans on streamlining operations, increasing warehouse productivity, aligning compensation and benefit plans, changing its product assortment, simplifying its process, and reducing system loads in order to improve the bottom line.

The Foolish bottom line

Sysco is operating in a low-growth market, which has the potential to lead to pricing pressure. However, Sysco is highly focused on rearranging its operations in order to cut costs and cater to consumer demand. Considering Sysco’s deep pockets and brand strength, it should be capable of accomplishing this goal. The only negative is that it’s likely to be a long and bumpy ride. The big selling point here is that you will have an opportunity to collect healthy dividend payments as you wait for everything to play out.

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The article Don’t Underestimate Sysco originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Hain Celestial and Sysco. The Motley Fool owns shares of Hain Celestial. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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