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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 its third-quarter 2022 results on Nov 2, before the opening bell. In the last reported quarter, the company’s bottom line missed the Zacks Consensus Estimate by 2.8%.
Q3 Estimates
The Zacks Consensus Estimate for third-quarter earnings per share is pegged at $1.14, indicating a decline of 6.6% from the prior-year quarter. The consensus mark for revenues stands at $1.64 billion, suggesting growth of 2% from $1.61 billion in the prior-year quarter.
Factors to Note
Yum! Brands’ third-quarter 2022 performance is likely to have benefited from robust same-store sales growth, expansion efforts and strong off-premise ordering channels. We expect KFC, Taco Bell and Habit Burger Grill comps to grow 1.4%, 4% and 2%, respectively. The company’s sales have continued to benefit from improvement in the nutritional value of its menu items, coupled with its distinctive plant-based offerings (such as KFC's Beyond Fried Chicken in the United States and Pizza Hut’s Beyond Italian Sausage Crumbles in Canada).
Our estimate showcases an increase of 0.6% to $696.2 million in the KFC segment and a gain of 4.4% to $258 million in the Pizza Hut segment for the quarter under discussion. We expect Taco Bell and Habit Burger Grill revenues to increase 4.4% and 3% year over year to $557.5 million and $137 million, respectively.
However, rising inflation levels are likely to have impacted margins in the to-be-reported quarter. We expect the adjusted operating margin in the quarter to be 31.8% compared with 32.3% reported in the prior-year quarter. An increase in the cost of employee wages, benefits and insurance, and other operating costs, such as rent and energy costs, put significant pressure on the company’s margins.
Our proven model predicts 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 +0.10%. 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.
Other Stocks Poised to Beat Earnings Estimates
Here are some other stocks from the Zacks Retail-Wholesale sector that investors may consider, as our model shows that these, too, have the right combination of elements to post an earnings beat in the quarter to be reported:
Shares of Noodles & Company have declined 52.5% in the past year. NDLS’ earnings beat the consensus mark twice in the trailing four quarters and missed twice. The company has a trailing four-quarter negative earnings surprise of 33.6% on average.
Texas Roadhouse, Inc. (TXRH - Free Report) currently has an Earnings ESP of +1.75% and a Zacks Rank #3.
Shares of Texas Roadhouse have improved 8.7% in the past year. TXRH’s earnings surpassed the consensus mark thrice in the trailing four quarters and missed once, the average surprise being 7.7%.
Foot Locker (FL - Free Report) currently has an Earnings ESP of +9.20% and a Zacks Rank #3. The company is likely to register a bottom-line decline when it reports its third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $1.10 suggests a decline from the $1.93 reported in the year-ago quarter.
Foot Locker's top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.10 billion, which indicates a decline of 3.9% from the figure reported in the prior-year quarter. Foot Locker has a trailing four-quarter earnings surprise of 28.6% on average.
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YUM! Brands (YUM) Gears Up for Q3 Earnings: What's in Store?
YUM! Brands, Inc. (YUM - Free Report) is scheduled to report its third-quarter 2022 results on Nov 2, before the opening bell. In the last reported quarter, the company’s bottom line missed the Zacks Consensus Estimate by 2.8%.
Q3 Estimates
The Zacks Consensus Estimate for third-quarter earnings per share is pegged at $1.14, indicating a decline of 6.6% from the prior-year quarter. The consensus mark for revenues stands at $1.64 billion, suggesting growth of 2% from $1.61 billion in the prior-year quarter.
Factors to Note
Yum! Brands’ third-quarter 2022 performance is likely to have benefited from robust same-store sales growth, expansion efforts and strong off-premise ordering channels. We expect KFC, Taco Bell and Habit Burger Grill comps to grow 1.4%, 4% and 2%, respectively. The company’s sales have continued to benefit from improvement in the nutritional value of its menu items, coupled with its distinctive plant-based offerings (such as KFC's Beyond Fried Chicken in the United States and Pizza Hut’s Beyond Italian Sausage Crumbles in Canada).
Our estimate showcases an increase of 0.6% to $696.2 million in the KFC segment and a gain of 4.4% to $258 million in the Pizza Hut segment for the quarter under discussion. We expect Taco Bell and Habit Burger Grill revenues to increase 4.4% and 3% year over year to $557.5 million and $137 million, respectively.
However, rising inflation levels are likely to have impacted margins in the to-be-reported quarter. We expect the adjusted operating margin in the quarter to be 31.8% compared with 32.3% reported in the prior-year quarter. An increase in the cost of employee wages, benefits and insurance, and other operating costs, such as rent and energy costs, put significant pressure on the company’s margins.
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 predicts 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 +0.10%. 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.
Other Stocks Poised to Beat Earnings Estimates
Here are some other stocks from the Zacks Retail-Wholesale sector that investors may consider, as our model shows that these, too, have the right combination of elements to post an earnings beat in the quarter to be reported:
Noodles & Company (NDLS - Free Report) currently has an Earnings ESP of +31.25% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Noodles & Company have declined 52.5% in the past year. NDLS’ earnings beat the consensus mark twice in the trailing four quarters and missed twice. The company has a trailing four-quarter negative earnings surprise of 33.6% on average.
Texas Roadhouse, Inc. (TXRH - Free Report) currently has an Earnings ESP of +1.75% and a Zacks Rank #3.
Shares of Texas Roadhouse have improved 8.7% in the past year. TXRH’s earnings surpassed the consensus mark thrice in the trailing four quarters and missed once, the average surprise being 7.7%.
Foot Locker (FL - Free Report) currently has an Earnings ESP of +9.20% and a Zacks Rank #3. The company is likely to register a bottom-line decline when it reports its third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $1.10 suggests a decline from the $1.93 reported in the year-ago quarter.
Foot Locker's top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.10 billion, which indicates a decline of 3.9% from the figure reported in the prior-year quarter. Foot Locker has a trailing four-quarter earnings surprise of 28.6% on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.