It has been about a month since the last earnings report for Yum! Brands, Inc. (YUM - Free Report) . Shares have added about 1.6% in that time frame.
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 Q4 Earnings Beat Estimates, Revenues Miss
Yum! Brands posted decent fourth-quarter 2017 results, beating the Zacks Consensus Estimate on earnings but missing the same on revenues.
Adjusted earnings of 96 cents per share surpassed the Zacks Consensus Estimate of 80 cents. Further, earnings increased 21.5% year over year. The shift to refranchising substantially boosted the company’s operating margin and earnings per share and the trend is expected to continue.
Total revenues of $1.58 billion were down 16.4% year over year and missed the Zacks Consensus Estimate of 1.61 billion. The decline in total revenues was mainly due to decrease in company sales as an impact of its continued strategic refranchising initiative. The reduction in ownership through refranchising is an overhang on near-term revenues.
Yum! Brands now reports under three segments – KFC, Pizza Hut and Taco Bell.
KFC revenues were $814 million, down 11.8% on a year-over-year basis. Comps at the KFC division increased 3% compared with the year-ago quarter’s rise of 2% and
the previous quarter’s increase of 4%.
Segment operating margin was up 6% year over year owing to refranchising and same-store sales growth.
At Pizza Hut, revenues were $234 million, down 24.3% on a year-over-year basis. Comps were up 1% against the year-ago quarter’s decline of 3% and preceding quarter’s increase of 1%.
Segment operating margin was up 2.9% year over year, attributable to refranchising, offset by higher franchise and license costs.
Taco Bell revenues were $531 million, down 18.8% from the year-ago quarter. Comps were up 2%, which compared unfavorably with the year-ago quarter and prior-quarter growth of 3%.
Segment operating margin was up 3.8% year over year, attributable to refranchising and same-store sales growth.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been three revisions higher for the current quarter compared to three lower.
At this time, YUM has a subpar Growth Score of D. Its Momentum is doing a bit better with a C. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum based on our styles scores.
YUM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.