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Why Is Yum (YUM) Up 1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Yum Brands (YUM - Free Report) . Shares have added about 1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Yum due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
YUM! Brands' Q3 Earnings Beat, Revenues Miss Estimates
YUM! Brands 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.
Earnings and Revenue Discussion
In third-quarter 2023, the company’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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Yum has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Yum has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Yum belongs to the Zacks Retail - Restaurants industry. Another stock from the same industry, McDonald's (MCD - Free Report) , has gained 5.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
McDonald's reported revenues of $6.69 billion in the last reported quarter, representing a year-over-year change of +14%. EPS of $3.19 for the same period compares with $2.68 a year ago.
For the current quarter, McDonald's is expected to post earnings of $2.81 per share, indicating a change of +8.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for McDonald's. Also, the stock has a VGM Score of B.
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Why Is Yum (YUM) Up 1% Since Last Earnings Report?
A month has gone by since the last earnings report for Yum Brands (YUM - Free Report) . Shares have added about 1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Yum due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
YUM! Brands' Q3 Earnings Beat, Revenues Miss Estimates
YUM! Brands 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.
Earnings and Revenue Discussion
In third-quarter 2023, the company’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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Yum has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Yum has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Yum belongs to the Zacks Retail - Restaurants industry. Another stock from the same industry, McDonald's (MCD - Free Report) , has gained 5.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
McDonald's reported revenues of $6.69 billion in the last reported quarter, representing a year-over-year change of +14%. EPS of $3.19 for the same period compares with $2.68 a year ago.
For the current quarter, McDonald's is expected to post earnings of $2.81 per share, indicating a change of +8.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for McDonald's. Also, the stock has a VGM Score of B.