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Yum China (YUMC) Q1 Earnings and Revenues Beat Estimates
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Yum China Holdings, Inc. (YUMC - Free Report) reported first-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Both top line and bottom lines increased on a year-over-year basis. YUMC benefited from robust same-store sales.
Earnings & Revenue Discussion
In first-quarter 2023, the company reported adjusted earnings of 69 cents per share, which beat the Zacks Consensus Estimate of 43 cents by 60.5%. The bottom line increased 188% from the 24 cents reported in the year-ago quarter.
Quarterly revenues of $2,917 million beat the consensus mark of $2,830 million by 3.1%. The top line rose 9% on a year-over-year basis. Excluding foreign currency translation, revenues increased 18% year over year.
Total system sales grew 17% year over year. System sales at KFC and Pizza Hut jumped 17% each (excluding foreign currency translation).
Same-store sales rose 8% year over year. This was primarily caused by decreases of 8% and 7% (excluding foreign currency translation) at KFC and Pizza Hut, respectively.
In first-quarter 2023, total costs and expenses amounted to $2,501 million, up 1% from the $2,477 million reported in the prior-year quarter.
The restaurant margin was 20.3% compared with 13.8% in the prior-year quarter. Growth primarily resulted from sales leveraging, cost structure rebasing, and temporary reprieve from the government and landlords.
In the quarter, the adjusted operating profit totaled $419 million compared with $193 million in the prior-year quarter. Adjusted net income amounted to $292 million compared with $102 million in the prior-year quarter.
Balance Sheet
As of Mar 31, cash and cash equivalents were $1,111 million compared with $1,130 million as of Dec 31, 2022. Inventories were $378 million compared with $417 million in the previous quarter.
In the first quarter, YUMC repurchased nearly 1 million shares at an average price of $60.3 per share. As of Mar 31, the company had $1.1 billion available for the buyback program.
Management declared a quarterly cash dividend of 13 cents per common share. The dividend will be payable on Jun 20 to shareholders of record as of May 30.
Unit Development and Other Updates
In first-quarter 2023, Yum China opened 233 net new stores due to the development of the KFC and Pizza Hut brands. As of Mar 31, total restaurant count reached 13,180.
In the quarter under review, Yum China’s delivery contributed nearly 36% of KFC and Pizza Hut's company sales.
Digital orders contributed 89% to KFC and Pizza Hut's company sales compared with 90% in the previous-year quarter. Loyalty programs of KFC and Pizza Hut led to year-over-year growth by increasing to more than 430 million members.
2023 Outlook
Yum China reaffirmed its 2023 view. Management expects opening 1,100-1,300 stores. It anticipates solid expansion related to KFC and Pizza Hut stores, along with growth of same-store sales. Capital expenditure in 2023 is anticipated to be $700-$900 million.
Arcos Dorados has a long-term earnings growth rate of 7.2%. ARCO has gained 6.9% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2024 sales suggests growth of 13.4% from the year-ago period’s levels.
Chipotle has a long-term earnings growth rate of 31.8%. CMG has improved 41.9% in the past year.
The Zacks Consensus Estimate for Chipotle’s 2024 sales and EPS suggests growth of 13.8% and 32.3%, respectively, from the year-ago period’s reported levels.
Chuy’s Holdings has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have gained 40.2% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests growth of 10.8% and 19%, respectively, from the year-ago period’s reported levels.
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Yum China (YUMC) Q1 Earnings and Revenues Beat Estimates
Yum China Holdings, Inc. (YUMC - Free Report) reported first-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Both top line and bottom lines increased on a year-over-year basis. YUMC benefited from robust same-store sales.
Earnings & Revenue Discussion
In first-quarter 2023, the company reported adjusted earnings of 69 cents per share, which beat the Zacks Consensus Estimate of 43 cents by 60.5%. The bottom line increased 188% from the 24 cents reported in the year-ago quarter.
Quarterly revenues of $2,917 million beat the consensus mark of $2,830 million by 3.1%. The top line rose 9% on a year-over-year basis. Excluding foreign currency translation, revenues increased 18% year over year.
Total system sales grew 17% year over year. System sales at KFC and Pizza Hut jumped 17% each (excluding foreign currency translation).
Same-store sales rose 8% year over year. This was primarily caused by decreases of 8% and 7% (excluding foreign currency translation) at KFC and Pizza Hut, respectively.
Yum China Price, Consensus and EPS Surprise
Yum China price-consensus-eps-surprise-chart | Yum China Quote
Operating Highlights
In first-quarter 2023, total costs and expenses amounted to $2,501 million, up 1% from the $2,477 million reported in the prior-year quarter.
The restaurant margin was 20.3% compared with 13.8% in the prior-year quarter. Growth primarily resulted from sales leveraging, cost structure rebasing, and temporary reprieve from the government and landlords.
In the quarter, the adjusted operating profit totaled $419 million compared with $193 million in the prior-year quarter. Adjusted net income amounted to $292 million compared with $102 million in the prior-year quarter.
Balance Sheet
As of Mar 31, cash and cash equivalents were $1,111 million compared with $1,130 million as of Dec 31, 2022. Inventories were $378 million compared with $417 million in the previous quarter.
In the first quarter, YUMC repurchased nearly 1 million shares at an average price of $60.3 per share. As of Mar 31, the company had $1.1 billion available for the buyback program.
Management declared a quarterly cash dividend of 13 cents per common share. The dividend will be payable on Jun 20 to shareholders of record as of May 30.
Unit Development and Other Updates
In first-quarter 2023, Yum China opened 233 net new stores due to the development of the KFC and Pizza Hut brands. As of Mar 31, total restaurant count reached 13,180.
In the quarter under review, Yum China’s delivery contributed nearly 36% of KFC and Pizza Hut's company sales.
Digital orders contributed 89% to KFC and Pizza Hut's company sales compared with 90% in the previous-year quarter. Loyalty programs of KFC and Pizza Hut led to year-over-year growth by increasing to more than 430 million members.
2023 Outlook
Yum China reaffirmed its 2023 view. Management expects opening 1,100-1,300 stores. It anticipates solid expansion related to KFC and Pizza Hut stores, along with growth of same-store sales. Capital expenditure in 2023 is anticipated to be $700-$900 million.
Zacks Rank & Other Key Picks
Yum China currently has a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Zacks Retail-Wholesale sector are Arcos Dorados Holdings Inc. (ARCO - Free Report) , Chipotle Mexican Grill, Inc. (CMG - Free Report) and Chuy's Holdings, Inc. (CHUY - Free Report) . Arcos Dorados and Chipotle currently sport a Zacks Rank #1 (Strong Buy), whereas Chuy’s Holdings carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arcos Dorados has a long-term earnings growth rate of 7.2%. ARCO has gained 6.9% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2024 sales suggests growth of 13.4% from the year-ago period’s levels.
Chipotle has a long-term earnings growth rate of 31.8%. CMG has improved 41.9% in the past year.
The Zacks Consensus Estimate for Chipotle’s 2024 sales and EPS suggests growth of 13.8% and 32.3%, respectively, from the year-ago period’s reported levels.
Chuy’s Holdings has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have gained 40.2% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests growth of 10.8% and 19%, respectively, from the year-ago period’s reported levels.