The food and beverage market continues to thrive despite lingering macroeconomic conditions. Changing consumer preferences, advancement in digital technologies like AI and ML, and a rising worldwide population further present attractive opportunities for the industry.
Given the industry’s promising outlook, investing in fundamentally strong food and beverage stocks Sysco Corporation (SYY), Tyson Foods, Inc. (TSN), and Coca-Cola Consolidated, Inc. (COKE) could be ideal for long-term investors.
Given the necessity and stable demand for food products, the food-making industry generally performs well regardless of economic uncertainties. Also, in recent times, the food manufacturing industry has rapidly transformed with the adoption of technologies and automation. Therefore, amid this, investors can consider these stocks for long-term investment and growth.
Factors like the pandemic, food inflation, and shifts in consumer behavior have highly impacted the food industry landscape. Increased demand for online shopping surged food and beverage sales as a percentage of total retail e-commerce sales significantly, reaching nearly 16% in 2023 from 9.3% in 2017. The sales are projected to reach 21.5% by 2027.
According to Cognitive Market Research, in the global Food and Beverage market, North America held a major market of more than 40% of the global revenue, having a market size of $2.67 billion in 2024. The North American food and beverage industry is expected to grow at a CAGR of 5% from 2024 to 2031, driven by growing health consciousness and environmental concerns.
Further, as internet and smartphone usage increases and consumers lean more towards convenient and fast services, the food and service delivery choices are expanding. Also, the use of machine learning (ML) and artificial intelligence (AI) to improve delivery routes and increase operational efficiencies enhances prospects for restaurants and delivery platforms.
The United States online food delivery market was valued at $29.10 billion in 2023. IMARC Group expects the market to hit around $68.60 billion by 2032, exhibiting a CAGR of 9.8%.
Given the industry’s robust outlook, investing in fundamentally strong food and beverage stocks SYY, TSN, and COKE could be wise.
Let’s discuss the fundamentals of these stocks in detail:
Sysco Corporation (SYY)
SYY markets and distributes several food and related products to the foodservice or food-away-from-home industry internationally. The company operates through U.S. Foodservice Operations; International Foodservice Operations; SYGMA; and Other segments.
On October 14, SYY launched 19 innovative, labor-saving concepts available exclusively for Sysco customers through the company’s Cutting Edge Solutions platform nationwide. SYY’s Cutting Edge Solutions boosts efficiency and ignites creativity by offering labor-saving bites and showstopping menu centerpieces.
The new offering provides the right tools for chefs and includes a selection of exclusive, new, chef-tested products created to smoothen kitchen operations and revolutionize menus.
On August 15, SYY’s Board of Directors declared a regular quarterly cash dividend of $0.51 per share, payable on October 25, 2024, to common stockholders of record at the close of business on October 4, 2024.
SYY’s annual dividend of $2.04 translates to a yield of 2.71% at the current share price. Its four-year average dividend yield is 2.50%. Moreover, the company’s dividend payouts have increased at a CAGR of 5.3% over the past five years. Sysco has raised its dividends for 9 consecutive years.
For the fourth quarter that ended June 29, 2024, SYY’s sales grew 4.2% year-over-year to $20.56 billion. The company’s non-GAAP gross profit increased 4.3% from the year-ago value to $3.84 billion. Its operating income came in at $1.08 billion, up 6.4% from the prior year’s quarter. Its adjusted EBITDA rose 5.4% from the preceding year's period to $1.26 billion.
Street expects SYY’s EPS and revenue for the first quarter (ended September 2024) to increase 5.5% and 4.3% year-over-year to $1.13 and $20.47 billion, respectively. Also, the company topped the consensus EPS estimates in each of the trailing four quarters, which is impressive.
Shares of SYY have gained 16.8% over the past year to close the last trading session at $75.22.
SYY’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
SYY has a B grade for Stability, Quality, and Value. It is ranked #8 out of 74 stocks in the B-rated Food Makers industry.
In addition to the POWR Ratings I’ve just highlighted, you can see SYY’s ratings for Momentum, Sentiment, and Growth here.
Tyson Foods, Inc. (TSN)
TSN operates as a food company globally. The company operates in four segments: Beef; Pork; Chicken; and Prepared Foods. It processes live-fed cattle and hogs and fabricates dressed beef and pork carcasses into primal and sub-primal meat cuts, case-ready beef and pork, and fully cooked meats.
On August 8, TSN’s Board of Directors declared a quarterly dividend of $0.49 per share on Class A common stock and $0.441 per share on Class B common stock, to be paid on December 13, 2024, to shareholders of record at the close of business on November 29, 2024.
TSN pays an annual dividend of $1.96, which translates to a yield of 3.27% at the current share price. Its four-year average dividend yield is 2.85%. Moreover, the company’s dividend payouts have increased at a CAGR of 3.3% over the past three years. Tyson has raised its dividends for 12 consecutive years.
On July 9, TSN entered into an agreement to sell its Vienna, Georgia, poultry complex to House of Raeford Farms. The company’s decision to sell the complex was part of its continued efforts to optimize its plant network, and it will continue to service customer orders from other production locations.
During the third quarter, which ended June 29, 2024, TSN's sales increased by 1.6% year-over-year to $13.35 billion. The company’s non-GAAP operating income increased 174.3% from the year-ago value to $491 million. Adjusted non-GAAP net income attributable to Tyson grew 483% and 480% year-over-year to $309 million and $0.87, respectively.
Analysts expect TSN’s revenue and EPS for the fourth quarter (ended September 2024) to increase marginally and 86.1% year-over-year to $13.42 billion and $0.69, respectively. Moreover, the company has an impressive earnings surprise history as it surpassed the consensus EPS estimate in all of the trailing four quarters.
TSN’s shares have surged 3% over the past six months and 26.4% over the past year to close the last trading session at $59.85.
TSN’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Growth, Value, and Sentiment. Within the Food Makers industry, TSN is ranked #22 out of 74 stocks.
Click here to access additional ratings of TSN for Quality, Momentum, and Stability.
Coca-Cola Consolidated, Inc. (COKE)
COKE manufactures, markets, and distributes non-alcoholic beverages, primarily Coca-Cola Company products. It offers sparkling beverages, still beverages, noncarbonated beverages, ready-to-drink coffee and tea, enhanced water, juices, and sports drinks.
On August 20, COKE’s Board of Directors increased its quarterly dividend to $2.50 per share, up from $0.50 per share. The increased dividend will be paid on November 8, 2024, to common stock and class B common stock stockholders of record as of October 25, 2024.
COKE pays an annual dividend of $2, which translates to a yield of 2% at the current share price. Its four-year average dividend yield is 0.65%. Also, the company’s dividend payouts have increased at a CAGR of 26% over the past three years.
In the second quarter that ended September 30, 2023, COKE’s net sales increased 3.3% year-over-year to $1.79 billion. Its adjusted gross profit rose 6.4% year-over-year to $715.63 million. Its adjusted income from operations grew 9.7% from the year-ago value to $257.81 million.
Also, the company’s adjusted net income came in at $192.76 million and $20.71 per share, up 11.8% and 12.6% from the previous year’s quarter, respectively.
COKE’s stock has gained 60.2% over the past six months and 105.7% over the past year to close the last trading session at $1301.58.
COKE’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Sentiment and Quality. COKE is ranked #8 of 34 stocks within the B-rated Beverages industry.
To see additional POWR Ratings of COKE for Growth, Value, Stability, and Momentum, click here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
SYY shares were trading at $75.67 per share on Tuesday afternoon, up $0.45 (+0.60%). Year-to-date, SYY has gained 6.30%, versus a 22.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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