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Louisville, Kentucky-based Yum! Brands, Inc. (YUM) develops, operates, and franchises various famous quick service restaurants like KFC, Taco Bell, Pizza Hut, and Habit Burger & Grill. With a market cap of $37.7 billion, it operates over 59,000 restaurants in more than 155 countries and territories. The QSR giant is expected to release its Q3 earnings before the market opens on Tuesday, Nov. 5.
Ahead of the event, analysts expect Yum! Brands to report a profit of $1.42 per share, down 1.4% from $1.44 per share reported in the year-ago quarter. The company has surpassed Wall Street's bottom-line estimates in two of the past four quarters while missing on two other occasions. Its adjusted EPS for the last reported quarter declined 4.3% year-over-year to $1.35 but exceeded the consensus estimates by 2.3%.
For fiscal 2024, analysts expect Yum! Brands to report an adjusted EPS of $5.60, up 8.3% from $5.17 in fiscal 2023. In fiscal 2025, its adjusted EPS is expected to grow 11.1% year-over-year to $6.22.
YUM stock has gained 2.6% on a YTD basis, significantly underperforming the S&P 500 Index’s ($SPX) 22.7% gains and the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 10.7% returns during the same time frame.
Despite reporting a drop in earnings and missing Wall Street’s topline expectations, shares of Yum! Brands rose 2.7% after the release of its Q2 earnings on Aug. 6. The company reported a total revenue growth of 4.5% year-over-year to $1.8 billion, fueled by an 11.9% increase in company sales to $572 million, although same-store sales fell by approximately 1%, resulting in lower-than-expected overall sales. The largest revenue contributor, franchise and property revenues, remained nearly flat at $789 million, despite a 5.1% increase in franchise units.
Additionally, its net margin contracted by 396 basis points to 20.8% compared to the year-ago quarter, translating to a 12.2% drop in net income to $367 million. However, its adjusted EPS surpassed analyst’s projections which led to an increase in stock prices.
The consensus opinion on YUM stock is moderately bullish, with an overall “Moderate Buy” rating. Out of the 26 analysts covering the stock, eight recommend “Strong Buy,” one advises “Moderate Buy,” and 17 suggest a “Hold” rating. As of writing, YUM is trading below the mean price target of $146.43.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
