YUM! Brands, Inc. (YUM Quick QuoteYUM - Free Report) reported fourth-quarter 2023 results, wherein both earnings and revenues missed the Zacks Consensus Estimate. Revenues missed the consensus estimate for the third straight quarter.

Following the results, shares of the company declined 2.4% in the pre-market trading session on Feb 7.

Earnings and Revenue Discussion

In fourth-quarter 2023, the company's adjusted earnings per share (EPS) came in at $1.26, lagging the Zacks Consensus Estimate of $1.39. The metric decreased 5% year over year.

Quarterly revenues of $2,036 million missed the consensus mark of $2,116 million. However, the top line increased 1% year over year.

Worldwide system sales — excluding foreign currency translation — increased 5% year over year, with Taco Bell, KFC and Pizza Hut rising 6%, 7% and 1% year over year, respectively.

Divisional Performance

YUM! Brands primarily announces results under four divisions — KFC, Pizza Hut, Taco Bell and Habit Burger Grill.

For fourth-quarter 2023, revenues from KFC totaled $761 million, down 4% year over year. Our model predicted the metric to increase 9.8% year over year. Comps in the division increased 2% year over year compared with 6% in the previous quarter.

The segment's operating margin increased 430 basis points (bps) year over year to 43.3%. In the quarter under review, the KFC division opened 1,067 gross new restaurants.

At Pizza Hut, revenues amounted to $281 million, down 2% year over year. Our model predicted the metric to increase 2.3% year over year. Comps in the quarter decreased 2% year over year.

The segment's operating margin increased 50 bps year over year to 35%. The Pizza Hut division opened 575 gross new restaurants.

Taco Bell's revenues were $819 million, up 7% year over year. Comps in the segment increased 3% year over year compared with 11% in the previous quarter. Its operating margin expanded 280 bps year over year to 34.9%.

Taco Bell opened 201 gross new restaurants in the quarter under review.

In the fourth quarter, the Habit Burger Grill division’s revenues amounted to $175 million, up 1.7% year over year. Our model predicted the metric to increase 10.3% year over year. Comps in the division declined 5% year over year. In the quarter under review, the division opened 10 gross new restaurants.

Other Financial Details

As of Dec 31, 2023, cash and cash equivalents totaled $512 million compared with $367 million at 2022-end. Long-term debt, as of Dec 31, 2023, was $11,142 million compared with $11,453 million as of 2022-end.

Zacks Rank & Key Picks

YUM currently carries a Zacks Rank #3 (Hold).

Below, we present some better-ranked stocks in the Zacks Retail – Restaurants industry.

Carrols Restaurant Group, Inc. sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 102%, on average. Shares of TAST have rallied 363.4% 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 levels.

Darden Restaurants, Inc. (DRI Quick QuoteDRI - 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 11.2% 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-earlier levels.

Dave & Buster's Entertainment, Inc. (PLAY Quick QuotePLAY - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 34.5%, on average. The stock has risen 45.9% in the past year.

The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS suggests a rise of 12.8% and 14.3%, respectively, from the prior-year levels.