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Yum China (YUMC) Q4 Earnings and Revenues Surpass Estimates
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Yum China Holdings, Inc. (YUMC - Free Report) reported impressive fourth-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
YUMC achieved record-breaking revenues and profits and returned substantial value to shareholders through cash dividends and share repurchases. During the year, the company returned $833 million to shareholders, up 25% year over year.
The company leverages its distinct strengths, which include brands deeply ingrained in China, remarkable agility and robust operational execution. These factors position YUMC favorably to achieve growth targets for 2024-2026. With a focus on enhancing shareholders’ value, the company aims to increase cash dividends and ramp up share buybacks. It expects to return a minimum of $3 billion to shareholders through 2024-26.
YUMC is optimistic about expanding its footprint in China by 2026. It emphasizes on strategic store openings in lower-tier cities to tap into long-term consumption trends. It also intends to introduce innovative products and marketing campaigns to drive sales across different city tiers.
In fourth-quarter 2023, the company reported adjusted earnings per share (EPS) of 25 cents, beating the Zacks Consensus Estimate of 13 cents. The bottom line surged 92.3% from 13 cents reported a year ago.
Quarterly revenues of $2.5 billion outpaced the consensus mark of $2.4 billion. The top line rose 19.4% on a year-over-year basis. Excluding foreign currency translation, revenues increased 21% year over year. The upside can be attributed to net new unit contribution (12%) and same-store sales growth (4%).
Total system sales increased 21% year over year. System sales at KFC and Pizza Hut increased 20% and 24% (excluding foreign currency translation), respectively.
Same-store sales moved up 4% year over year. The upside was primarily driven by 3% and 6% growth (excluding foreign currency translation) at KFC and Pizza Hut, respectively. Our model predicted the metric to improve 4.1% year over year.
Operating Highlights
In fourth-quarter 2023, total costs and expenses amounted to $2.4 billion compared with $2 billion reported in the prior-year quarter. Our model suggested the metric at $2.3 billion.
The restaurant margin was 10.7% compared with 10.4% a year ago. The upside was mainly backed by sales leveraging, lower rider costs, favorable commodity prices and lower advertising expenses.
During the quarter, adjusted operating profit totaled $116 million compared with $40 million a year ago. Adjusted net income amounted to $103 million compared with $52 million in the prior-year quarter.
Balance Sheet
As of Dec 31, cash and cash equivalents were $1.12 billion compared with $1.13 billion as of Dec 31, 2022. Inventories were $424 million compared with $417 million as of Dec 31, 2022.
In the fourth quarter, YUMC repurchased nearly 7.5 million shares for $336 million. As of Dec 31, the company had $1.5 billion available for the buyback program.
The company declared a 23% dividend hike to 16 cents per share, payable on Mar 26, 2024, to shareholders of record as of Mar 5, 2024.
Unit Development and Other Updates
In fourth-quarter 2023, Yum China opened 542 net new stores. As of Dec 31, the total restaurant count reached 14,644.
In the quarter under review, Yum China’s delivery contributed 38% to KFC and 40% to Pizza Hut's company sales.
In 2023, digital sales came in at $9.2 billion. Digital ordering contributed approximately 89% of total company sales.
2023 Highlights
Total revenues in 2023 amounted to approximately $11 billion compared with $9.6 billion in 2022.
Adjusted Net Income in 2023 totaled $842 million compared with $446 million reported in 2022.
In 2023, adjusted EPS came in at $2 per share compared with $1.05 reported in the previous year.
2024 Outlook
Management expects to open 1,500-1,700 new stores in 2024. Capital expenditures in 2024 are projected to be between $700-$850 million.
Carrols Restaurant Group, Inc. (TAST - Free Report) sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 102% on average. Shares of TAST have rallied 335.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TAST’s 2024 sales and EPS indicates 3.8% and 25.5% growth, respectively, from the year-ago period’s levels.
Darden Restaurants, Inc. (DRI - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 4.2%, on average. Shares of DRI have increased 10.9% in the past year.
The Zacks Consensus Estimate for DRI’s 2024 sales and EPS indicates 9.9% and 10.9% growth, respectively, from the year-ago period’s levels.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 34.5%, on average. The stock has gained 21.2% in the past year.
The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS suggests rises of 12.8% and 14.3%, respectively, from the year-ago period’s levels.
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Yum China (YUMC) Q4 Earnings and Revenues Surpass Estimates
Yum China Holdings, Inc. (YUMC - Free Report) reported impressive fourth-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
YUMC achieved record-breaking revenues and profits and returned substantial value to shareholders through cash dividends and share repurchases. During the year, the company returned $833 million to shareholders, up 25% year over year.
The company leverages its distinct strengths, which include brands deeply ingrained in China, remarkable agility and robust operational execution. These factors position YUMC favorably to achieve growth targets for 2024-2026. With a focus on enhancing shareholders’ value, the company aims to increase cash dividends and ramp up share buybacks. It expects to return a minimum of $3 billion to shareholders through 2024-26.
YUMC is optimistic about expanding its footprint in China by 2026. It emphasizes on strategic store openings in lower-tier cities to tap into long-term consumption trends. It also intends to introduce innovative products and marketing campaigns to drive sales across different city tiers.
Earnings & Revenue Discussion
Yum China Price, Consensus and EPS Surprise
Yum China price-consensus-eps-surprise-chart | Yum China Quote
In fourth-quarter 2023, the company reported adjusted earnings per share (EPS) of 25 cents, beating the Zacks Consensus Estimate of 13 cents. The bottom line surged 92.3% from 13 cents reported a year ago.
Quarterly revenues of $2.5 billion outpaced the consensus mark of $2.4 billion. The top line rose 19.4% on a year-over-year basis. Excluding foreign currency translation, revenues increased 21% year over year. The upside can be attributed to net new unit contribution (12%) and same-store sales growth (4%).
Total system sales increased 21% year over year. System sales at KFC and Pizza Hut increased 20% and 24% (excluding foreign currency translation), respectively.
Same-store sales moved up 4% year over year. The upside was primarily driven by 3% and 6% growth (excluding foreign currency translation) at KFC and Pizza Hut, respectively. Our model predicted the metric to improve 4.1% year over year.
Operating Highlights
In fourth-quarter 2023, total costs and expenses amounted to $2.4 billion compared with $2 billion reported in the prior-year quarter. Our model suggested the metric at $2.3 billion.
The restaurant margin was 10.7% compared with 10.4% a year ago. The upside was mainly backed by sales leveraging, lower rider costs, favorable commodity prices and lower advertising expenses.
During the quarter, adjusted operating profit totaled $116 million compared with $40 million a year ago. Adjusted net income amounted to $103 million compared with $52 million in the prior-year quarter.
Balance Sheet
As of Dec 31, cash and cash equivalents were $1.12 billion compared with $1.13 billion as of Dec 31, 2022. Inventories were $424 million compared with $417 million as of Dec 31, 2022.
In the fourth quarter, YUMC repurchased nearly 7.5 million shares for $336 million. As of Dec 31, the company had $1.5 billion available for the buyback program.
The company declared a 23% dividend hike to 16 cents per share, payable on Mar 26, 2024, to shareholders of record as of Mar 5, 2024.
Unit Development and Other Updates
In fourth-quarter 2023, Yum China opened 542 net new stores. As of Dec 31, the total restaurant count reached 14,644.
In the quarter under review, Yum China’s delivery contributed 38% to KFC and 40% to Pizza Hut's company sales.
In 2023, digital sales came in at $9.2 billion. Digital ordering contributed approximately 89% of total company sales.
2023 Highlights
Total revenues in 2023 amounted to approximately $11 billion compared with $9.6 billion in 2022.
Adjusted Net Income in 2023 totaled $842 million compared with $446 million reported in 2022.
In 2023, adjusted EPS came in at $2 per share compared with $1.05 reported in the previous year.
2024 Outlook
Management expects to open 1,500-1,700 new stores in 2024. Capital expenditures in 2024 are projected to be between $700-$850 million.
Zacks Rank & Key Picks
Yum China carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail – Restaurants industry include:
Carrols Restaurant Group, Inc. (TAST - Free Report) sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 102% on average. Shares of TAST have rallied 335.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TAST’s 2024 sales and EPS indicates 3.8% and 25.5% growth, respectively, from the year-ago period’s levels.
Darden Restaurants, Inc. (DRI - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 4.2%, on average. Shares of DRI have increased 10.9% in the past year.
The Zacks Consensus Estimate for DRI’s 2024 sales and EPS indicates 9.9% and 10.9% growth, respectively, from the year-ago period’s levels.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 34.5%, on average. The stock has gained 21.2% in the past year.
The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS suggests rises of 12.8% and 14.3%, respectively, from the year-ago period’s levels.