Investopedia: Can Sysco Sidestep The Squeeze?

When it comes to food distributor Sysco (NYSE:SYY), there certainly can be too much of a good thing. A controlled rate of food inflation is not a bad thing for this company, but when inflation gets too high, even a company as well-managed as Sysco can find that passing through all of those costs is more than their model can sustain. It's hard to imagine how Sysco won't be fine for the long haul, but the company may find it hard to maintain margins, during this period of turbulent food prices and stretched consumers.

A Mediocre Start to the Year  
Perhaps it's some testament to the quality and consistency of Sysco, that a couple pennies here or there have some analysts fretting about earnings quality, for this fiscal first quarter. At the top line, revenue growth of nearly 9% sounds pretty good, but that shine rubs off quickly. For starters, the company saw food inflation of over 7%, as well as kickers from acquisitions and foreign exchange. All in all, although the company reported that case volume rose more than 1%, underlying growth was actually ever so slightly negative for this quarter.

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