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YUM! Brands (YUM) Gears Up for Q3 Earnings: What's in Store?

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YUM! Brands, Inc. (YUM - Free Report) is scheduled to report third-quarter 2021 results on Oct 28, before the opening bell. In the last reported quarter, the company’s bottom line beat the Zacks Consensus Estimate by 22.1%.

Q3 Estimates

The Zacks Consensus Estimate for third-quarter earnings per share is pegged at $1.06, indicating growth of 5% from the prior-year quarter. The consensus mark for revenues stands at $1.58 billion, suggesting growth of 9.4% from $1.45 billion reported in the prior-year quarter.

Factors to Note

Yum! Brands’ third-quarter performance is likely to have benefited from focus on off-premise channels, menu innovations and strategic investments in digital technology. The company might have gained from robust sales momentum in North America, the U.K. and Australia, and improved performance in Europe.

The company has also been benefiting from unit growth. During first and second-quarter 2021, the company opened 435 and 603 net new units, respectively. KFC opened 428 net new units in second-quarter 2021.

Robust performance of Taco Bell, Pizza Hut and KFC may have favored the company's performance in the to-be-reported quarter. Taco Bell has not only been gaining from expanding its presence but also from bolstered media presence with the launch of its loyalty program. The roll out of new e-commerce platform (in the KFC segment) and the omni-channel menu management system (in the Pizza Hut segment) are likely to have favored the third-quarter performance. Taco Bell recorded 91 gross new restaurants openings in second-quarter 2021.

Yum! Brands’ partnership with online food delivery platform, Grubhub, continues to enhance online sales and delivery from its restaurants. The company has been implementing various digital features in mobile and online platforms across all brand segments to enhance guest experience. It has been working toward making its delivery services faster and the results have been positive so far.

Yum Brands, Inc. Price and EPS Surprise Yum Brands, Inc. Price and EPS Surprise

Yum Brands, Inc. price-eps-surprise | Yum Brands, Inc. Quote

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Yum! Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Yum! Brands has an Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, of -1.38%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Stocks Poised to Beat Earnings Estimates

Here are some stocks from the Zacks Retail-Wholesale space that investors may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

The Cheesecake Factory Incorporated (CAKE - Free Report) has an Earnings ESP of +0.98% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Five Below, Inc. (FIVE - Free Report) has an Earnings ESP of +3.90% and a Zacks Rank #3.

Wingstop Inc. (WING - Free Report) has an Earnings ESP of +0.87% and a Zacks Rank #3.

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