Sysco Corp. (NYSE:SYY)

Return on Assets (ROA)

The return on assets exhibited significant volatility throughout the analyzed period. Initially, in 2019, the ROA was relatively strong at 9.32%. However, it sharply declined to 0.95% in 2020, indicating a substantial reduction in the company's efficiency in generating earnings from its assets. Subsequently, there was a gradual recovery from 2020 to 2024, with ROA improving to 2.45% in 2021, 6.15% in 2022, and further increasing to 7.76% in 2023 and 7.85% in 2024. While the figures in recent years approach the initial level of 2019, the overall trend reveals a temporary significant downturn followed by a consistent rebound.

Financial Leverage

Financial leverage saw notable fluctuations over the period. Starting at 7.18 in 2019, the ratio sharply increased to a peak of 19.53 in 2020, which implies a marked increase in the use of debt relative to equity. Following this spike, leverage decreased to 13.79 in 2021, then increased again to 15.98 in 2022. Afterward, it tapered down to 11.36 in 2023 before rising slightly to 13.4 in 2024. This pattern suggests the company adjusted its capital structure multiple times, indicating varying levels of dependence on debt financing with a general trend of elevated leverage compared to 2019.

Return on Equity (ROE)

Return on equity displayed considerable variability. In 2019, the ROE was extremely high at 66.9%, which significantly dropped to 18.6% in 2020, reflecting diminished profitability from the shareholders' perspective. The metric rebounded to 33.76% in 2021 and then surged dramatically to 98.3% in 2022. Although it decreased somewhat in 2023 to 88.13%, the figure rose again to a peak of 105.11% in 2024. The trend shows a pattern of recovery and growth in shareholder returns after 2020, with ROE reaching very high levels at the end of the period, likely influenced by changing financial leverage and improved asset returns.

The analysis of the financial ratios over the six-year period reveals significant fluctuations and notable trends in profitability, efficiency, leverage, and shareholder returns.

Net Profit Margin (%)

The net profit margin experienced a sharp decline from 2.79% in 2019 to a low of 0.41% in 2020, likely reflecting adverse conditions during that year. Following this dip, there is a gradual and consistent recovery, reaching 2.48% by 2024, which almost approaches the initial 2019 level. This indicates improvement in profitability and cost management after the 2020 downturn.

Asset Turnover (ratio)

The asset turnover ratio showed a decline from 3.35 in 2019 to 2.34 in 2020, which suggests a reduction in efficiency of asset use at the height of the difficult period. The ratio then stabilizes and improves steadily through to 2023, peaking at 3.34, closely matching the 2019 performance. However, in 2024, the ratio slightly declines to 3.16, indicating a modest drop in efficiency but still above the 2020 and 2021 levels.

Financial Leverage (ratio)

There is significant variability in financial leverage. It increased dramatically from 7.18 in 2019 to a peak of 19.53 in 2020, indicating a substantial rise in reliance on debt financing. This was followed by a reduction to 13.79 in 2021 and some fluctuations thereafter, trending downward to 11.36 in 2023 before slightly increasing again to 13.4 in 2024. The elevated leverage in 2020 suggests increased financial risk during that period, with subsequent efforts possibly aimed at deleveraging.

Return on Equity (ROE) (%)

ROE exhibits the most volatile pattern, dropping steeply from 66.9% in 2019 to 18.6% in 2020, reflecting the impacts seen in margin and operational efficiency. Subsequently, ROE recovers significantly, surging to 33.76% in 2021 and displaying extraordinary growth in the following years, peaking at 105.11% in 2024. Despite fluctuating financial leverage, the increasing ROE suggests enhanced profitability and effective use of equity capital in recent years.

In summary, the data highlight a challenging 2020 marked by reduced profitability, efficiency, and increased leverage. The post-2020 period shows a strong recovery trend with improving net profit margins and asset turnover, alongside fluctuating but generally decreasing leverage. The return on equity follows an increasingly positive trajectory, indicating strengthening equity returns and possibly improved operational performance.

The analysis of the financial ratios over the years reveals several notable trends and fluctuations in the company's financial performance and efficiency.

Tax Burden

The tax burden ratio has shown some volatility but remained relatively stable in recent years. Starting at 0.83 in 2019, it dropped to 0.73 in 2020, spiked to 0.9 in 2021, and then settled around 0.76 to 0.78 from 2022 to 2024. This indicates moderate fluctuations in the effective tax rate impacting net profitability.

Interest Burden

There was a significant decline in the interest burden ratio from 0.85 in 2019 to approximately 0.4 in 2020 and 2021, suggesting a substantial reduction in interest expenses relative to earnings before interest and taxes. Subsequently, the ratio recovered to around 0.74 in 2022 and stabilized near 0.81 in the following two years, implying an increase and then consistency in interest costs relative to EBIT.

EBIT Margin

The EBIT margin experienced a considerable decline in 2020, dropping from 3.94% to 1.33%, likely reflecting the impact of adverse business conditions. However, the margin rebounded steadily each year thereafter, reaching 4.02% in 2024, which suggests improving operational profitability and cost management.

Asset Turnover

The asset turnover ratio decreased notably from 3.35 in 2019 to around 2.34 - 2.4 during 2020 and 2021, indicating reduced efficiency in utilizing assets to generate sales. From 2022 onwards, there was a recovery trend with ratios climbing back towards the 3.1 to 3.34 range, although it slightly declined to 3.16 in 2024, signifying overall improvement but some recent slight deceleration in asset utilization.

Financial Leverage

The financial leverage ratio exhibited high volatility, spiking dramatically from 7.18 in 2019 to 19.53 in 2020, then declining to 13.79 in 2021. It fluctuated around 11.36 to 15.98 between 2022 and 2024, indicating changes in the company's reliance on debt financing and variability in equity base, which could suggest shifts in capital structure strategy or market conditions influencing borrowing levels.

Return on Equity (ROE)

The ROE showed substantial instability, decreasing sharply from 66.9% in 2019 to 18.6% in 2020, which aligns with the declines seen in other profitability metrics. This was followed by a recovery phase, with ROE improving to 33.76% in 2021 and surging to a peak of 105.11% by 2024. The sharp increase reflects amplified profitability from equity holders’ perspective, possibly driven by improved margins, asset utilization, and leverage.

Overall, the financial data illustrates a period of stress around 2020, with declines in profitability, asset turnover, and increased financial leverage, likely due to external economic or industry-wide challenges. Recovery is evident in subsequent years through improved operating margins, asset efficiency, and ROE, notwithstanding some volatility in leverage and interest burden ratios. This suggests ongoing adjustments in financial and operational management contributing to enhanced shareholder returns by 2024.

Net Profit Margin

The net profit margin experienced a significant decline from 2.79% in 2019 to a low of 0.41% in 2020. Following this drop, there was a gradual recovery over subsequent years, rising to 1.02% in 2021 and continuing upward to reach 2.48% by 2024. This indicates an overall improvement in profitability relative to revenue after the sharp decrease in 2020.

Asset Turnover

Asset turnover showed a downward trend from 3.35 in 2019 to a trough of 2.34 in 2020. It then stabilized around the mid-2 range before increasing again in 2022 and 2023, peaking at 3.34. The metric slightly declined to 3.16 in 2024. This pattern suggests fluctuations in the efficiency of asset use to generate sales, with a notable recovery after the initial drop in 2020.

Return on Assets (ROA)

Return on assets followed a pattern similar to that of net profit margin, declining sharply from 9.32% in 2019 to 0.95% in 2020. Subsequent years saw a steady increase to 7.85% by 2024, indicating a restored and improving ability to generate profit from the company’s assets over time.

The financial data over the six-year period indicates several notable trends across key performance metrics.

Tax Burden (ratio)

The tax burden ratio fluctuated moderately, starting at 0.83 in 2019, dropping to its lowest point of 0.73 in 2020, then increasing to 0.9 in 2021 before stabilizing around 0.76-0.78 in subsequent years. This pattern suggests varying effective tax rates affecting net income over the period.

Interest Burden (ratio)

The interest burden showed considerable volatility. It sharply declined from 0.85 in 2019 to 0.42 in 2020 and further to 0.4 in 2021, indicating a significant increase in interest expense relative to EBIT during those years. However, it recovered strongly to 0.74 in 2022 and then stabilized near 0.81 in 2023 and 2024, suggesting an improvement in interest coverage and financial cost management.

EBIT Margin (%)

The EBIT margin experienced a marked dip from 3.94% in 2019 to 1.33% in 2020, reflecting a challenging profitability environment. Subsequently, the margin steadily increased each year, reaching 4.02% by 2024, indicating a recovery and improvement in operating efficiency and profitability.

Asset Turnover (ratio)

The asset turnover ratio fell significantly from 3.35 in 2019 to 2.34 in 2020 and remained relatively stable at 2.4 in 2021. It then improved to 3.11 in 2022, peaked at 3.34 in 2023, and slightly decreased to 3.16 in 2024, signifying a general trend toward enhanced utilization of assets to generate sales, particularly after 2021.

Return on Assets (ROA) (%)

ROA showed a substantial drop from 9.32% in 2019 to 0.95% in 2020, aligning with decreases in both EBIT margin and asset turnover. From 2021 onwards, there was a consistent improvement, with ROA rising to 2.45%, then sharply increasing to 6.15% in 2022, further to 7.76% in 2023, and stabilizing around 7.85% in 2024. This recovery reflects enhanced overall profitability and efficiency in asset utilization over time.

In summary, the data reveals an initial period of financial strain in 2020, characterized by reduced profitability, lower asset efficiency, and higher relative interest burdens. Following this, there is a clear pattern of recovery and improvement across all key metrics, culminating in enhanced operational performance and asset utilization by 2024.

Tax Burden

The tax burden ratio exhibits some fluctuations over the analyzed period. Starting at 0.83 in mid-2019, it declines notably to 0.73 in 2020, then peaks at 0.9 in 2021 before again decreasing and stabilizing around 0.76 to 0.78 in the most recent years. This pattern suggests variable effective tax rates or changes in tax management strategies during the period.

Interest Burden

The interest burden ratio shows a significant decline from 0.85 in 2019 to a low of 0.40-0.42 in 2020 and 2021, indicating a reduction in interest expense relative to earnings before interest and taxes. Following this period, it rises again to around 0.74-0.81 for 2022 through 2024, signaling an increase in interest expense or changes in debt structure.

EBIT Margin

The EBIT margin demonstrates a strong recovery and overall upward trend across the period. After a steep drop from 3.94% in 2019 to 1.33% in 2020, the margin progressively improves each year, reaching 4.02% by mid-2024. This upward trajectory indicates enhanced operational efficiency or improved profitability at the earnings before interest and taxes level.

Net Profit Margin

Net profit margin mirrors the trends observed in EBIT margin, exhibiting a sharp decline to 0.41% in 2020 from 2.79% in 2019, followed by a gradual recovery to 2.48% in 2024. The steady increase over recent years suggests improved bottom-line profitability, albeit not yet reaching the initial 2019 level, reflecting effective cost control and margin recovery efforts.