SYSCO Corporation (SYY) Could Become One of Buffett’s Favorites (Part 3): United Natural Foods, Inc. (UNFI), Core-Mark Holding Company, Inc. (CORE)

Quite cheaply valued

Sysco is trading at nearly $33 per share, with a total market cap of around $19 billion. The market is valuing Sysco at only 8.35 times EV/EBITDA. United Natural Foods (NASDAQ:UNFI) is a much smaller company, with nearly $2.5 billion in total market cap. At the current trading price of around $50 per share, the company is valued more expensively at 12.67 times EV/EBITDA. Core-Mark Holding Company, Inc. (NASDAQ:CORE), the smallest company, is worth around $550 million on the market. At the current trading price of around $48 per share, the market is valuing Core-Mark Holding Company, Inc. (NASDAQ:CORE) at only 7.35 times EV/EBITDA, the cheapest valuation among the three.

Foolish bottom line

I personally think that with huge economies of scale and an efficient operation, Sysco should deserve a much higher valuation than the current market valuation. If Sysco is valued at around 12 times EV/EBITDA, it would be $46 per share, a 44% premium on its current trading price.

The article This Company Could Become One of Buffett’s Favorites (Part 3) originally appeared on Fool.com and is written by Anh HOANG.

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