SYSCO (SYY) is the better company, but U.S. Foods (USFD) wins with lower debt risk and higher upside

Updated: Jul 25, 2020

Quick Diligence Request: The SYSCO Corporation (SYY) and U.S. Foods Holding Corp (USFD) have both been hit hard by COVID as restaurants, schools, and hotels have closed down due to quarantine. SYY is ~30% lower than pre-COVID levels, while USFD is ~55% lower than pre-COVID levels. Given the essential nature of these businesses and the economic reopening in the U.S., both companies have survived the riskiest period of COVID and is likely a safe investment. However, we’ve determined that USFD is the safer investment as they do not have debt maturing until 2022 and have ~$1.1B in cash, including their credit line. Furthermore, there is more upside with USFD than SYY.

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