Sysco Guides FY26 Earnings to High-end of Range, Navigating Lapping Paste Effects

Sysco Corp. (SYY) has reaffirmed its full-year 2026 earnings guidance while projecting results at the upper-end of its previously established range. The food distribution company now expects adjusted earnings between $4.50 and $4.60 per share, with the company positioning itself at the higher boundary of this outlook. This updated stance comes as the firm reported its second-quarter financial results, demonstrating solid operational momentum despite various headwinds.

Earnings Guidance Reflects Resilient Performance

The company’s adjusted EPS guidance remains intact at the $4.50-$4.60 range, translating to analyst consensus expectations of $4.58 per share. Across the fiscal year, Sysco projects sales reaching approximately $84.44 billion. What distinguishes this guidance update is the emphasis on the high-end positioning, signaling management confidence in execution and market conditions.

A key consideration in this guidance framework involves the impact of lapping paste effects—specifically, how prior-year incentive compensation levels create a comparison headwind. The company notes an approximate $100 million or $0.16-per-share headwind from lower incentive compensation in fiscal 2025. This lapping paste dynamic is important for investors to understand when evaluating true operational performance against reported EPS figures.

Adjusting for Lapping Paste to Reveal True Growth

When stripping out the lapping paste impact from incentive compensation adjustments, the underlying earnings-per-share growth trajectory becomes clearer. Excluding this comparison effect, Sysco now projects operating EPS growth in the 5-to-7 percent range on a normalized basis. This adjusted growth rate provides a more accurate reflection of the company’s operational improvements and margin management capabilities.

Market Validates Positive Outlook

Investor sentiment reflected immediate approval of the guidance and results. SYY shares opened pre-market trading at $78.00, representing a gain of $2.35 or 3.10 percent from the prior close. This stock performance underscores the market’s confidence in Sysco’s ability to navigate both inflationary pressures and the lapping paste hurdles that typically affect year-over-year comparisons in the distribution sector.

The company’s decision to position guidance at the high-end of its range, while transparently addressing the lapping paste effects on incentive compensation, demonstrates disciplined capital management and realistic forward guidance that resonates with institutional investors tracking the food distribution industry.