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.
Yum China (YUMC) Provides Q1 Business Update, Stock Down
Read MoreHide Full Article
Yum China Holdings, Inc. (YUMC - Free Report) recently provided an update on its business for first-quarter 2022. The company’s operations have been affected by the rise in COVID-19 cases across China. Following the news, the company’s shares declined 2.5% during trading hours on Mar 14, 2022.
Q1 Updates
Following the sequential improvements in same-store sales (in January 2022), the company’s operations are said to have been affected by the resurgence of COVID-19 cases, particularly in Guangdong, Shanghai, Shandong and Jilin regions. The company stated that same-store sales declined 4% year over year (for the two months combined in January and February) and 20% year over year (for the first two weeks of March 2022). Tight curbs on travel and dining, owing to stricter preventive health and containment measures, added to the downside.
As a result of the spread of the Omicron variant, the company witnessed substantial sales deleveraging. Restaurant margins are under pressure by the declining impact of cost inflation. Operating profit (for the two months combined in January and February 2022) fell 20% year over year. Going by the latest developments, the company anticipates first-quarter operating profit in the range of $165-$200 million.
The Omicron variant of coronavirus had caused unexpected shutdowns. As of Mar 13, 2022, the company had temporarily shut down (or continued takeaway and delivery services) more than 1,100 stores compared with approximately 500 stores in January.
Yum China is optimistic regarding its long-term business growth, despite the pandemic-related volatility. Joey Wat, CEO of Yum China, stated, “With our resilient business models, operational excellence and leading digital and delivery capabilities, we are confident we will overcome this challenging and volatile situation. We will continue to execute our RGM strategic framework to fortify resilience, accelerate growth and widen our strategic moat."
Price Performance
Image Source: Zacks Investment Research
Coming to price performance, shares of Yum China have plunged 41.2% in the past year compared with the industry’s 15.8% fall. The dismal performance was primarily caused by the coronavirus crisis. Dine-in traffic and sales at transportation locations remain well below 2019 levels. As strict public health measures remain in effect nationwide, the company anticipates same-store sales recovery to take time. Earnings estimates for 2022 have declined in the past 60 days, depicting analysts’ concern regarding the stock’s growth potential.
Zacks Rank & Key Picks
Yum China currently has a Zacks Rank #5 (Strong Sell).
Designer Brands sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 116%, on average. Shares of the company have declined 3.6% in the past six months.
The Zacks Consensus Estimate for Designer Brands’ 2022 sales and earnings per share (EPS) suggests growth of 44% and 143.3%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth of 24.7%. Shares of the company have increased 41% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 35% and 120.8%, respectively, from the year-ago period’s levels.
Tapestry carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 28.2%, on average. Shares of the company have declined 24.7% in the past year.
The Zacks Consensus Estimate for Tapestry’s 2022 sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period’s levels.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Yum China (YUMC) Provides Q1 Business Update, Stock Down
Yum China Holdings, Inc. (YUMC - Free Report) recently provided an update on its business for first-quarter 2022. The company’s operations have been affected by the rise in COVID-19 cases across China. Following the news, the company’s shares declined 2.5% during trading hours on Mar 14, 2022.
Q1 Updates
Following the sequential improvements in same-store sales (in January 2022), the company’s operations are said to have been affected by the resurgence of COVID-19 cases, particularly in Guangdong, Shanghai, Shandong and Jilin regions. The company stated that same-store sales declined 4% year over year (for the two months combined in January and February) and 20% year over year (for the first two weeks of March 2022). Tight curbs on travel and dining, owing to stricter preventive health and containment measures, added to the downside.
As a result of the spread of the Omicron variant, the company witnessed substantial sales deleveraging. Restaurant margins are under pressure by the declining impact of cost inflation. Operating profit (for the two months combined in January and February 2022) fell 20% year over year. Going by the latest developments, the company anticipates first-quarter operating profit in the range of $165-$200 million.
The Omicron variant of coronavirus had caused unexpected shutdowns. As of Mar 13, 2022, the company had temporarily shut down (or continued takeaway and delivery services) more than 1,100 stores compared with approximately 500 stores in January.
Yum China is optimistic regarding its long-term business growth, despite the pandemic-related volatility. Joey Wat, CEO of Yum China, stated, “With our resilient business models, operational excellence and leading digital and delivery capabilities, we are confident we will overcome this challenging and volatile situation. We will continue to execute our RGM strategic framework to fortify resilience, accelerate growth and widen our strategic moat."
Price Performance
Image Source: Zacks Investment Research
Coming to price performance, shares of Yum China have plunged 41.2% in the past year compared with the industry’s 15.8% fall. The dismal performance was primarily caused by the coronavirus crisis. Dine-in traffic and sales at transportation locations remain well below 2019 levels. As strict public health measures remain in effect nationwide, the company anticipates same-store sales recovery to take time. Earnings estimates for 2022 have declined in the past 60 days, depicting analysts’ concern regarding the stock’s growth potential.
Zacks Rank & Key Picks
Yum China currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the Zacks Retail-Wholesale sector include Designer Brands Inc. (DBI - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Tapestry, Inc. (TPR - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Designer Brands sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 116%, on average. Shares of the company have declined 3.6% in the past six months.
The Zacks Consensus Estimate for Designer Brands’ 2022 sales and earnings per share (EPS) suggests growth of 44% and 143.3%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth of 24.7%. Shares of the company have increased 41% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 35% and 120.8%, respectively, from the year-ago period’s levels.
Tapestry carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 28.2%, on average. Shares of the company have declined 24.7% in the past year.
The Zacks Consensus Estimate for Tapestry’s 2022 sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period’s levels.