The advancements in food technology, such as precision fermentation, cellular agriculture, and AI-driven food formulation, revolutionize production processes and enable the creation of novel products. The growing use of smart packaging reflects an increased focus on food safety and traceability. Revenue in the food market is expected to grow at a CAGR of 4.1% by 2029.

Moreover, the ready-to-eat food industry is experiencing significant transformation driven by evolving demand for organic and locally sourced products and lifestyle changes. Modern consumers are increasingly seeking convenient meal solutions that align with their fast-paced lifestyles while maintaining nutritional value. People have even become attentive to their pets’ nutritional needs.

Against this backdrop, let’s compare two food maker stocks, Sysco Corporation (SYY) and Freshpet, Inc. (FRPT), to analyze which food stock is poised for growth.

The Case for Sysco Corporation stock

Valued at $36.20 billion by market cap, Sysco Corporation (SYY) engages in the marketing and distributing various food and related products to the foodservice or food-away-from-home industry internationally. The company operates through U.S. Foodservice Operations; International Foodservice Operation; SYGMA; and other segments.

SYY’s stock has gained marginally over the past six months to close the last trading session at $73.70.

On December 18, SYY announced a new partnership with Square to assist restaurants of all sizes to succeed and work smarter by leveraging powerful technology. The collaboration will allow SYY’s customers to receive a compelling processing fee rebate and hardware credits when enrolling through Sysco.

On October 14, SYY introduced 19 innovative, labor-saving concepts nationwide, made available exclusively for SYY customers through its Cutting-Edge Solutions platform. The offered solutions enhanced efficiency and increased creativity.

In terms of the trailing-12-month ROCE, SYY’s 89.64% is 721.6% higher than the 10.91% industry average. Likewise, its 14.87% trailing-12-month ROTC is 106.9% higher than the 7.19% industry average.

For the first quarter that ended September 28, 2024, SYY’s sales grew 4.4% year-over-year to $20.48 billion. The company’s non-GAAP gross profit increased 2.7% from the year-ago value to $3.75 billion. Its non-GAAP operating income came in at $873 million, up 2.2% from the previous year’s quarter.

Furthermore, the company’s net earnings stood at $540 million and $1.09 per share for the quarter. Also, its adjusted EBITDA increased 4.4% from the prior-year quarter to $1.07 billion.

Street expects SYY’s revenue for the second quarter (ended December 2024) to increase 4.2% year-over-year to $20.10 billion. The company’s EPS for the same period is expected to grow 3.8% from the prior year’s quarter to $0.92. Moreover, it has topped the consensus EPS estimates in three of the trailing four quarters.

SYY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

SYY has a B grade for Value and Stability. It is ranked #6 out of 75 stocks in the Food Makers industry.

Click here for the additional POWR Ratings for SYY (Quality, Growth, Sentiment, and Momentum).

The Case for Freshpet, Inc. stock

Valued at $7.67 billion by market cap, Freshpet, Inc. (FRPT) manufactures, distributes, and markets natural fresh meals and treats for dogs and cats in the United States, Canada, and Europe.

FRPT’s stock has gained 18.6% over the past three months to close the last trading session at $158.03.

In terms of the trailing-12-month EBIT margin, FRPT’s 3.67% is 62.3% lower than the 9.74% industry average. Likewise, its 10.71% trailing-12-month EBITDA margin is 17.5% lower than the industry average of 12.98%.

FRPT’s net sales for the third quarter that ended September 30, 2024, increased 26.3% year-over-year to $253.40 million. The company’s total comprehensive income and net income per share attributable to common stockholders of FRPT came in at $12.50 million and $0.24.

Street expects FRPT’s revenue for the quarter ending March 2025 to increase 23.8% year-over-year to $277.04 million. The company’s EPS for the same quarter is expected to decline 38.2% year-over-year to $0.23.

FRPT’s bleak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, translating to a Sell in our proprietary rating system.

The stock has an F grade for Value and a D for Momentum. Within the same industry, FRPT is ranked #70.

In addition to the POWR Ratings I’ve just highlighted, you can see FRPT’s ratings for Growth, Stability, Sentiment, and Quality here.

Sysco Corporation (SYY) vs. Freshpet, Inc. (FRPT): Which Food Stock Is Poised for Growth?

The food maker market is increasingly gravitating towards healthier and more sustainable food options. This shift is driven by a growing awareness of the impact of food choices on personal health and the environment (even in the pet-care market).

As a result, there is a rising demand for plant-based and organic products, as well as a preference for locally grown and ethically sourced ingredients, thereby driving growth in the food industry. 

Both SYY and FRPT stand to capitalize on the burgeoning industry trends. However, SYY’s higher profitability favors it as the better food maker stock pick.

Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Food Makers industry here.

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SYY shares were trading at $74.64 per share on Friday afternoon, up $0.94 (+1.28%). Year-to-date, SYY has declined -1.72%, versus a 3.67% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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