Sysco Corp. (NYSE:SYY)

The Price to Operating Profit (P/OP) ratio exhibited significant volatility over the period from 2006 to 2024, characterized by an initial contraction, a mid-term expansion, an extreme anomaly in 2020, and a subsequent return to historical norms.

Early Valuation Contraction (2006–2011)

A downward trend in the P/OP ratio is observed during the early part of the sequence, declining from 13.83 in 2006 to a low of 8.00 in 2009. This period was marked by relatively stable share prices and a gradual increase in operating profit per share, which effectively compressed the valuation multiple.

Valuation Expansion (2012–2019)

The ratio entered a growth phase starting in 2012, rising from 9.45 to a peak of 18.89 in 2015. While operating profits fluctuated, the share price began a more aggressive ascent, particularly after 2016. The P/OP ratio remained elevated between 13.55 and 16.64 throughout the latter half of this decade, indicating a higher market premium attributed to the company's operating earnings.

The 2020 Profitability Shock

An extreme spike in the P/OP ratio to 39.01 occurred in 2020. This was not driven by a surge in share price, which actually declined to 57.50, but rather by a severe contraction in operating profit per share, which fell to 1.47. This divergence created a temporary and abnormal valuation peak.

Recovery and Normalization (2021–2024)

Following the 2020 anomaly, a consistent normalization of the P/OP ratio is observed. The ratio declined from 28.14 in 2021 to 11.77 by 2024. This trend was driven by a strong and steady recovery in operating profit per share, which reached a period high of 6.51 in 2024. The current valuation multiple of 11.77 aligns closely with the levels observed between 2007 and 2008, suggesting a return to long-term historical averages.