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YUM! Brands' (YUM) Q3 Earnings Beat, Revenues Miss Estimates
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YUM! Brands, Inc. (YUM - Free Report) reported mixed third-quarter 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. The top and e bottom lines increased on a year-over-year basis. The company benefited from robust same-store sales and unit growth.
Following the results, the stock fell 0.7% in the pre-market trading session on Oct 31.
Earnings and Revenue Discussion
In third-quarter 2023, YUM’s adjusted earnings per share (EPS) reached $1.44, surpassing the Zacks Consensus Estimate of $1.26. The metric jumped 32% from the prior year.
Quarterly revenues of $1,708 million missed the consensus mark of $1,773 million. Yet, the top line improved 4% year over year. The upside can be attributed to a rise in revenues across its operating divisions.
Worldwide system sales — excluding foreign currency translation — gained 10% year over year, with Taco Bell, KFC and Pizza Hut rising 11%, 12% and 4%, respectively, year over year.
Yum! Brands, Inc. Price, Consensus and EPS Surprise
YUM! Brands primarily announces results under four divisions — KFC, Pizza Hut, Taco Bell and Habit Burger Grill.
For third-quarter 2023, revenues from KFC totaled $700 million, down 1% from a year ago. Our model predicted the metric to rise 8.7% year over year. Comps in the division increased 6% year over year compared with 13% in the previous quarter.
Segmental operating margin extended 580 basis points (bps) year over year to 49.2%. In the quarter under review, KFC Division opened 664 gross new restaurants in 57 countries.
At Pizza Hut, revenues amounted to $242 million, up 2% year over year. Our model suggested the metric to gain 2.8% year over year. Comps in the quarter increased 4% year over year.
Segmental operating margin expanded 130 bps year over year to 40.3%. Pizza Hut Division opened 383 gross new restaurants in 33 countries in the reported quarter.
Taco Bell's revenues were $629 million, up 11% from the year-ago levels. We expected the metric to improve 8.1% year over year. Comps in the segment grew 11% year over year compared with 4% in the previous quarter. Operating margin expanded 10 bps year over year to 36%.
Taco Bell opened 74 gross new restaurants in 13 countries in the quarter under discussion.
Habit Burger Grill’s revenues reached $137 million, up 4.6% year over year. Our model projected the metric to improve 12.8% year over year. Comps in the division declined 5% year over year. In the reported quarter, the division opened nine gross new restaurants in the United States.
Other Financial Details
As of Sep 30, 2023, cash and cash equivalents totaled $656 million compared with $367 million at the end of 2022. Long-term debt, as of Sep 30, 2023, was $11,152 million compared with $11,453 million as of 2022 end.
The Zacks Consensus Estimate for FAT’s 2024 sales and EPS suggests improvements of 36.3% and 29.6%, respectively, from the year-ago levels.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 23.7%, on average. Shares of LOCO have declined 4.6% in the past year.
The Zacks Consensus Estimate for LOCO’s 2024 sales and EPS indicates 3.4% and 18.7% growth, respectively, from the year-ago figures.
Arcos Dorados Holdings Inc. (ARCO - Free Report) currently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 35%, on average. The stock has risen 25.7% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2024 sales and EPS suggests advancements of 8.5% and 16.2%, respectively, from the prior-year numbers.
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YUM! Brands' (YUM) Q3 Earnings Beat, Revenues Miss Estimates
YUM! Brands, Inc. (YUM - Free Report) reported mixed third-quarter 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. The top and e bottom lines increased on a year-over-year basis. The company benefited from robust same-store sales and unit growth.
Following the results, the stock fell 0.7% in the pre-market trading session on Oct 31.
Earnings and Revenue Discussion
In third-quarter 2023, YUM’s adjusted earnings per share (EPS) reached $1.44, surpassing the Zacks Consensus Estimate of $1.26. The metric jumped 32% from the prior year.
Quarterly revenues of $1,708 million missed the consensus mark of $1,773 million. Yet, the top line improved 4% year over year. The upside can be attributed to a rise in revenues across its operating divisions.
Worldwide system sales — excluding foreign currency translation — gained 10% year over year, with Taco Bell, KFC and Pizza Hut rising 11%, 12% and 4%, respectively, year over year.
Yum! Brands, Inc. Price, Consensus and EPS Surprise
Yum! Brands, Inc. price-consensus-eps-surprise-chart | Yum! Brands, Inc. Quote
Divisional Performance
YUM! Brands primarily announces results under four divisions — KFC, Pizza Hut, Taco Bell and Habit Burger Grill.
For third-quarter 2023, revenues from KFC totaled $700 million, down 1% from a year ago. Our model predicted the metric to rise 8.7% year over year. Comps in the division increased 6% year over year compared with 13% in the previous quarter.
Segmental operating margin extended 580 basis points (bps) year over year to 49.2%. In the quarter under review, KFC Division opened 664 gross new restaurants in 57 countries.
At Pizza Hut, revenues amounted to $242 million, up 2% year over year. Our model suggested the metric to gain 2.8% year over year. Comps in the quarter increased 4% year over year.
Segmental operating margin expanded 130 bps year over year to 40.3%. Pizza Hut Division opened 383 gross new restaurants in 33 countries in the reported quarter.
Taco Bell's revenues were $629 million, up 11% from the year-ago levels. We expected the metric to improve 8.1% year over year. Comps in the segment grew 11% year over year compared with 4% in the previous quarter. Operating margin expanded 10 bps year over year to 36%.
Taco Bell opened 74 gross new restaurants in 13 countries in the quarter under discussion.
Habit Burger Grill’s revenues reached $137 million, up 4.6% year over year. Our model projected the metric to improve 12.8% year over year. Comps in the division declined 5% year over year. In the reported quarter, the division opened nine gross new restaurants in the United States.
Other Financial Details
As of Sep 30, 2023, cash and cash equivalents totaled $656 million compared with $367 million at the end of 2022. Long-term debt, as of Sep 30, 2023, was $11,152 million compared with $11,453 million as of 2022 end.
Zacks Rank & Key Picks
YUM currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail – Restaurants industry are:
FAT Brands Inc. (FAT - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 28.7%, on average. The stock has fallen 24% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FAT’s 2024 sales and EPS suggests improvements of 36.3% and 29.6%, respectively, from the year-ago levels.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 23.7%, on average. Shares of LOCO have declined 4.6% in the past year.
The Zacks Consensus Estimate for LOCO’s 2024 sales and EPS indicates 3.4% and 18.7% growth, respectively, from the year-ago figures.
Arcos Dorados Holdings Inc. (ARCO - Free Report) currently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 35%, on average. The stock has risen 25.7% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2024 sales and EPS suggests advancements of 8.5% and 16.2%, respectively, from the prior-year numbers.