Yum! Brands, Inc. (NYSE:YUM) is Tasting Good Heading into Earnings

Yum! Brands, Inc. (YUM) Consumer Discretionary – Hotels, Restaurants & Leisure| Reports July 13, After Market Closes

Yum! Brands, Inc. – Key Takeaways

  • The Estimize consensus is looking for earnings of 76 cents per share on $3.10 billion in revenue, 2 cents higher than Wall Street on the bottom line and right in line on the top
  • Yum Brands continues to report strong sales comparisons despite increasing competition and negative currency translation
  • Later this year, Yum plans to spin off its China business into its own separate entity in spite of relative softness there
  • What are you expecting for YUM? Get your estimate in here!

Popular fast food chain, Yum Brands, is scheduled to report Q2 earnings Wednesday, after the market closes. While the quick serve industry has rebounded in recent years, Yum’s results have been mixed. Earnings have seen double digit gains the past 3 quarters while revenue has been near zero or negative over the same time period. The stock has largely tracked these ups and downs, decreasing 5% in the past 12 months.

Second quarter results are looking to be consistent with past reports. The Estimize consensus is looking for earnings of 76 cents per share on $3.10 billion in revenue, 2 cents higher than Wall Street on the bottom line and right in line on the top. Compared to a year earlier, earnings are expected to grow by 9% with revenue remaining unchanged. Revisions activity since Yum’s last report show that EPS estimates are rising into the report, while sales have trended downward.Yum Brands is responsible for operating notable chains such as KFC, Pizza Hut and Taco Bell. In recent quarters there have been strong results from domestic markets which has offset the sluggish growth internationally. The first quarter featured a system sales increase of 5% with same store sales up 2% over the same period. Yum China stood out compared to its other sectors, boasting an 11% rise in system wide sales and 6% in same store sales.

Comps are expected to remain high this quarter on the back of strength in the Taco Bell, KFC, and Pizza Hut Brands. Taco Bell has been hugely successful with its breakfast offerings while menu innovation and increased efficiency in KFC and Pizza Hut should also drive comps. Emerging markets might have a difficult time sustaining its upward momentum due to currency headwinds. Meanwhile, China continues to face headwinds in the form of a sluggish economy, food safety scandals and increasing competition from McDonald’s.
Do you think YUM can beat estimates? There is still time to get your estimate in here!