Bull case
Sysco is making a strategic move by expanding into the Cash & Carry channel, and while the acquisition of Restaurant Depot at a valuation multiple higher than Sysco's own equity may seem surprising, it will ultimately add considerable revenue and adjusted EBITDA to the company's bottom line. With expected post-transaction leverage of 4.6x and a unique go-to-market approach, the addition of Restaurant Depot is expected to have a positive impact on Sysco's sales, profit margins, and free cash flow yield. Although concerns about ERP costs, restaurant share losses, and potential overseas acquisitions exist, the overall risk-reward profile for Sysco is still attractive, with the stock trading at a low multiple of 10x our 2026E EBITDA and an immediate post-acquisition profitability multiple of 10.3x. As a result, our outlook for Sysco's stock is positive.