We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Factors Setting the Tone for Yum! Brands' (YUM) Q2 Earnings
Read MoreHide Full Article
Yum! Brands, Inc. (YUM - Free Report) is scheduled to report second-quarter 2020 results on Jul 29. In the last-reported quarter, the company earnings were in line with the Zacks Consensus Estimate.
How Are Estimates Placed?
The Zacks Consensus Estimate for second-quarter bottom line is pegged at 50 cents per share, indicating a decline of 46.2% from earnings of 93 cents reported in the year-ago quarter. For revenues, the consensus mark stands at $1,168 million, suggesting a decrease of 10.9% from the year-ago figure.
Let's take a look at how things have shaped up in the quarter.
The coronavirus pandemic is expected to have materially affected Yum! Brands’ second-quarter performance. In May, KFC generated mid-teens same-store sales growth versus a decline of low-20s reported at first quarter-end. As of May 31, the metric grew mid-single digits.
Pizza Hut also delivered low-teens same-store sales growth in May. At March-end, the same fell in mid-teens. At the end of May, same-store sales were up in low-single digits. Particularly in delivery and carry-out-only restaurants, the same grew approximately 15% year over year. Taco Bell registered slight growth in May same-store sales against nearly 30% decline at the end of the first quarter. As of May-end, same-store sales declined high-single digits.
However, despite the improvement, the company is witnessing decline in traffic due to rise in COVID-19 cases as well as lower dining reopening. Notably, these are likely to get reflected in second-quarter 2020 results.
The Zacks Consensus Estimate for revenues at KFC, Pizza Hut and Taco Bell segments is pegged at $499 million, $223 million and $440 million, suggesting a year-over-year decline of 14.6%, 9.3% and 8.3%, respectively.
Moreover, the company has been increasingly focusing on delivery channels, which again is expected to have hurt margins in the second quarter. Also, costs related to transactions and franchises are expected to have shot up.
Nonetheless, continuous focus on online ordering and other digital platforms coupled with marketing and transition initiatives to an off-premise business model is likely to have aided the top line in the to-be-reported quarter.
What Our Model Says
Our proven model predicts an earnings beat for YUM! Brands this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates.
Earnings ESP: YUM! Brands has an Earnings ESP of +14.46%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some stocks from the Zacks Retail - Restaurants space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:
Papa John's International, Inc. (PZZA - Free Report) has a Zacks Rank #1 and an Earnings ESP of +7.56%.
The Cheesecake Factory Incorporated (CAKE - Free Report) has a Zacks Rank #3 and an Earnings ESP of +21.21%.
Brinker International, Inc. (EAT - Free Report) has a Zacks Rank #3 and an Earnings ESP of +19.81%.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Image: Bigstock
Factors Setting the Tone for Yum! Brands' (YUM) Q2 Earnings
Yum! Brands, Inc. (YUM - Free Report) is scheduled to report second-quarter 2020 results on Jul 29. In the last-reported quarter, the company earnings were in line with the Zacks Consensus Estimate.
How Are Estimates Placed?
The Zacks Consensus Estimate for second-quarter bottom line is pegged at 50 cents per share, indicating a decline of 46.2% from earnings of 93 cents reported in the year-ago quarter. For revenues, the consensus mark stands at $1,168 million, suggesting a decrease of 10.9% from the year-ago figure.
Let's take a look at how things have shaped up in the quarter.
Yum Brands, Inc. Price and EPS Surprise
Yum Brands, Inc. price-eps-surprise | Yum Brands, Inc. Quote
Factors at Play
The coronavirus pandemic is expected to have materially affected Yum! Brands’ second-quarter performance. In May, KFC generated mid-teens same-store sales growth versus a decline of low-20s reported at first quarter-end. As of May 31, the metric grew mid-single digits.
Pizza Hut also delivered low-teens same-store sales growth in May. At March-end, the same fell in mid-teens. At the end of May, same-store sales were up in low-single digits. Particularly in delivery and carry-out-only restaurants, the same grew approximately 15% year over year. Taco Bell registered slight growth in May same-store sales against nearly 30% decline at the end of the first quarter. As of May-end, same-store sales declined high-single digits.
However, despite the improvement, the company is witnessing decline in traffic due to rise in COVID-19 cases as well as lower dining reopening. Notably, these are likely to get reflected in second-quarter 2020 results.
The Zacks Consensus Estimate for revenues at KFC, Pizza Hut and Taco Bell segments is pegged at $499 million, $223 million and $440 million, suggesting a year-over-year decline of 14.6%, 9.3% and 8.3%, respectively.
Moreover, the company has been increasingly focusing on delivery channels, which again is expected to have hurt margins in the second quarter. Also, costs related to transactions and franchises are expected to have shot up.
Nonetheless, continuous focus on online ordering and other digital platforms coupled with marketing and transition initiatives to an off-premise business model is likely to have aided the top line in the to-be-reported quarter.
What Our Model Says
Our proven model predicts an earnings beat for YUM! Brands this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates.
Earnings ESP: YUM! Brands has an Earnings ESP of +14.46%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks Poised to Beat Earnings Estimates
Here are some stocks from the Zacks Retail - Restaurants space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:
Papa John's International, Inc. (PZZA - Free Report) has a Zacks Rank #1 and an Earnings ESP of +7.56%.
The Cheesecake Factory Incorporated (CAKE - Free Report) has a Zacks Rank #3 and an Earnings ESP of +21.21%.
Brinker International, Inc. (EAT - Free Report) has a Zacks Rank #3 and an Earnings ESP of +19.81%.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>