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Yum China (YUMC) Gears Up for Q4 Earnings: What's in Store?
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Yum China Holdings, Inc. (YUMC - Free Report) is scheduled to report fourth-quarter 2023 results on Feb 6, after market close. In the last reported quarter, the company’s earnings and revenues missed the Zacks Consensus Estimate by 10.6% and 3.6%, respectively.
How are Estimates Placed?
The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at 13 cents, flat year over year. In the past 30 days, earnings estimates have witnessed an upward revision of 8.3%. For revenues, the consensus mark is pegged at $2.37 billion, indicating an increase of 13.5% from the prior-year quarter’s level of $2.09 billion.
Key Factors to Consider
Expansion efforts, menu innovation, robust digitalization and a strong loyalty program are expected to have driven Yum China's top line in the quarter under review. The company has been actively embracing digital and content marketing strategies to broaden its customer base. Additionally, it has implemented a high-quality delivery approach by partnering with aggregators to attract traffic and utilizing its own KFC riders to fulfill orders.
Digital orders are expected to have continued robust performance during the fourth quarter. In the last reported quarter, digital orders contributed 89% to KFC and Pizza hut’s company sales.
Our model predicts KFC revenues to be $1.83 billion, indicating growth of 15.5% from the prior-year levels. We expect Pizza Hut’s revenues to be $455.5 million, indicating a 12.7% increase from the year-ago level. We anticipate same-store sales of the company to increase 1.1% compared with the prior-year quarter's figure.
Due to the prevailing inflationary conditions and rising overall costs and expenses, Yum China may have faced margin pressure. Nevertheless, the impact of these challenges is anticipated to be mitigated by the company's effective leveraging of sales as well as its restructuring of cost structures. In the fourth quarter, our model predicts adjusted operating margin to be 2.8% compared with 1.9% in the year-earlier quarter.
Our proven model doesn’t conclusively predict an earnings beat for Yum China 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.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Yum China has an Earnings ESP of +20.76% and a Zacks Rank #4 (Sell) at present.
Stocks to Consider
Here are some stocks worth considering from the Zacks Retail-Wholesale space, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.
CMG’s earnings for the quarter under review are expected to increase 17.1% year over year. It reported better-than-expected earnings in three of the trailing four quarters and missed in one, the average surprise being 5.8%.
Darden Restaurants, Inc. (DRI - Free Report) has an Earnings ESP of +0.99% and a Zacks Rank of 2 at present.
DRI is expected to register 12.8% growth in earnings for the quarter to be reported. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 4.2%.
Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank of 3 at present.
JACK’s earnings for the to-be-reported quarter are expected to decline 3% year over year. It reported better-than-expected earnings in three of the trailing four quarters and missed in one, the average surprise being 10.1%.
Image: Bigstock
Yum China (YUMC) Gears Up for Q4 Earnings: What's in Store?
Yum China Holdings, Inc. (YUMC - Free Report) is scheduled to report fourth-quarter 2023 results on Feb 6, after market close. In the last reported quarter, the company’s earnings and revenues missed the Zacks Consensus Estimate by 10.6% and 3.6%, respectively.
How are Estimates Placed?
The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at 13 cents, flat year over year. In the past 30 days, earnings estimates have witnessed an upward revision of 8.3%. For revenues, the consensus mark is pegged at $2.37 billion, indicating an increase of 13.5% from the prior-year quarter’s level of $2.09 billion.
Key Factors to Consider
Expansion efforts, menu innovation, robust digitalization and a strong loyalty program are expected to have driven Yum China's top line in the quarter under review. The company has been actively embracing digital and content marketing strategies to broaden its customer base. Additionally, it has implemented a high-quality delivery approach by partnering with aggregators to attract traffic and utilizing its own KFC riders to fulfill orders.
Digital orders are expected to have continued robust performance during the fourth quarter. In the last reported quarter, digital orders contributed 89% to KFC and Pizza hut’s company sales.
Our model predicts KFC revenues to be $1.83 billion, indicating growth of 15.5% from the prior-year levels. We expect Pizza Hut’s revenues to be $455.5 million, indicating a 12.7% increase from the year-ago level. We anticipate same-store sales of the company to increase 1.1% compared with the prior-year quarter's figure.
Due to the prevailing inflationary conditions and rising overall costs and expenses, Yum China may have faced margin pressure. Nevertheless, the impact of these challenges is anticipated to be mitigated by the company's effective leveraging of sales as well as its restructuring of cost structures. In the fourth quarter, our model predicts adjusted operating margin to be 2.8% compared with 1.9% in the year-earlier quarter.
Yum China Price and EPS Surprise
Yum China price-eps-surprise | Yum China Quote
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Yum China 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.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Yum China has an Earnings ESP of +20.76% and a Zacks Rank #4 (Sell) at present.
Stocks to Consider
Here are some stocks worth considering from the Zacks Retail-Wholesale space, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.
Chipotle Mexican Grill, Inc. (CMG - Free Report) has an Earnings ESP of +1.30% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CMG’s earnings for the quarter under review are expected to increase 17.1% year over year. It reported better-than-expected earnings in three of the trailing four quarters and missed in one, the average surprise being 5.8%.
Darden Restaurants, Inc. (DRI - Free Report) has an Earnings ESP of +0.99% and a Zacks Rank of 2 at present.
DRI is expected to register 12.8% growth in earnings for the quarter to be reported. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 4.2%.
Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank of 3 at present.
JACK’s earnings for the to-be-reported quarter are expected to decline 3% year over year. It reported better-than-expected earnings in three of the trailing four quarters and missed in one, the average surprise being 10.1%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.