Sysco Corp. (NYSE: SYY) reported its fourth-quarter fiscal 2026 results on Tuesday, and the numbers were better than Wall Street expected. The food distributor beat on both earnings and revenue, thanks to solid volume growth in its U.S. foodservice business and continued strength overseas. It also gave fiscal 2027 guidance that came in above analysts' forecasts, suggesting that restaurants and other foodservice customers are still ordering plenty.

Q4 Earnings Beat Estimates

Sysco reported adjusted earnings of $1.53 per share, beating the analyst consensus estimate of $1.51. Quarterly sales rose 4.7% year over year to $22.124 billion, ahead of the Street estimate of $21.938 billion.

GAAP net earnings increased 3.8% to $551 million, while diluted earnings per share rose to $1.15 from $1.10 a year earlier. Adjusted net earnings climbed 2.5% to $734 million.

Gross profit increased 3.7% to $4.13 billion, although gross margin narrowed 17 basis points to 18.7% due to product cost inflation, primarily in meat and fresh produce. Operating income rose 10.6% to $983 million, while adjusted operating income increased 4.1% to $1.14 billion.

Volume Growth Supports Results

U.S. Foodservice sales increased 4.4% to $15.4 billion during the quarter. Total case volume rose 2.5%, while local case volume increased 2.6%.

International Foodservice sales grew 6.7% to $4.2 billion, marking the segment's 11th consecutive quarter of double-digit adjusted operating income growth. Local volume in the international business increased 4.5%.

Chairman and CEO Kevin Hourican said the company delivered positive case growth across its local, national and international businesses and expects artificial intelligence-driven process improvements to further expand operating margins.

Balance Sheet And Capital Allocation

As of the end of the quarter, Sysco maintained cash and cash equivalents of $1.786 billion and total liquidity of $4.8 billion. The company reported a debt-to-net-earnings ratio of approximately 7.7 times, while its net-debt-to-adjusted-EBITDA ratio stood at approximately 2.7 times.

During the fiscal year, Sysco returned $1.2 billion to shareholders through $200 million in stock repurchases and $1.0 billion in dividends. Operating cash flow rose 5.1% year-over-year to $2.6 billion, while free cash flow surged 16.3% to $2.1 billion. Capital expenditures, net of proceeds from sales of plant and equipment, totaled $524 million for fiscal 2026.

Annual Outlook Stays Strong Despite Recall

Sysco forecast fiscal 2027 adjusted earnings per share of $5.03 to $5.12, above the analyst consensus estimate of $4.93. The company expects sales of $89.63 billion to $90.47 billion, ahead of the Street estimate of $88.71 billion.

Reuters reported that the company forecast strong annual results after beating quarterly sales and profit estimates, driven by improving orders from domestic and international customers despite macroeconomic uncertainty and a cyclosporiasis outbreak in the U.S.

Last month, Sysco halted sales and distribution of Taylor Farms-processed iceberg lettuce from Mexico and recalled the products after U.S. health agencies linked them to a multistate cyclosporiasis outbreak.

The guidance implies sales growth of 6% to 7% and adjusted EPS growth of 9% to 11% on a 53-week basis. Management said the outlook includes approximately $100 million in combined cost savings from AI-enabled business transformation initiatives and previously announced cost-out actions, including carry-forward benefits from earlier initiatives.

SYY Stock Price Activity: Sysco shares were up 1.08% at $85.90 during premarket trading on Tuesday, according to market data.