Sysco Corporation – Beginning of Long-Term Correction?

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Fundamental Indicators:

• Sector – Consumer Defensive
  
• US Business Cycle Stage – late cycle, when this sector is favourable
  
• Revenue – not a consistent growth, 2020 and 2021 broken the uptrend, however 2022 TTM is considerably higher than the previous year
  
• Profits – same as revenue
  
• Net margin – low margin business with just 1.98%
  
• P/E – quite high with 32 ratio compared to S&P500 with 21 and Consumer Defensive sector with 23
  
• Liabilities - debt ratio is at 0.94 which is a little over the norm, Net Debt/ EBITDA is at 3.01 which is acceptable – increasing rates will have negative impact on servicing the debt
  
• Conclusion – although performance of the company in 2022 TTM is considerably better than in the previous year, several factors like rising rates which will increase servicing of higher than normal debt, will eat into already low margins, as well as worsening economic situation, high PE – all are negative factors which are likely to impact stock price
  

Technical Analysis (Elliott Waves):

• Main scenario of this idea suggests that we are still observing development of the global growth cycle which is currently at the stage of starting wave 4 (see higher timeframe graph)
  
• Since the correction after the Great Financial Crisis of 2008 the company has enjoyed explosive growth. However, the bull run was very choppy with multiple crossings which is always a good sign of an Ending Diagonal (see guidelines for Ending Diagonals below) that has completed global wave 3
  
• From that peak which culminated in April 2022 we can see a new mid-term bear move is forming with first leg as a double zigzag in wave W and ABC zigzag in wave W
  
• The next wave may present a good shorting opportunity with initial target of $68
  

This is a higher timeframe to reflect the full history of Sysco Corporation and to provide full wave count:

This is the link to the guidelines for Ending Diagonals

What do you think about Sysco Corporation and its short term prospects?
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