3 Numbers to Watch When Yum! Brands Reports Q1 Earnings

Photo Credit: m01229

Yum! Brands, Inc. (YUM) Consumer Discretionary - Hotels, Restaurants & Leisure| Reports April 20, After Market Closes

Key Takeaways

• The Estimize consensus is calling for earnings per share of $0.85 on $2.64 billion in revenue, 2 cents higher than Wall Street on the bottom line and $16 million below on the top.
• Taco Bell has been Yum’s best performer, carrying growth from strong breakfast sales in domestic markets
• Later this year, Yum plans to spin off its China business into its own separate entity despite a laundry list of health scares in the region
• What are you expecting for YUM? Get your estimate in here!

Popular fast food brand, Yum Foods, is scheduled to report first quarter earnings Wednesday, after the market closes. Yum Brands is responsible for bringing us notable chains such as KFC, Pizza Hut and Taco Bell. Lately, results have been mixed, with EPS missing in 4 of the last 8 quarters. Revenue results have been even worse off, missing in 7 of the last 8 quarters. The stock has largely tracked these ups and down, but overall has remained relatively flat in the last 12 months. Unfortunately, Q1 results aren’t expected to be much better. The Estimize consensus is calling for earnings per share of $0.85 on $2.64 billion in revenue, 2 cents higher than Wall Street on the bottom line and $16 million below on the top. Compared to a year prior, earnings are expected to grow 5% while sales should increase an anemic 1%. Just like earnings, the stock is relatively inactive leading up and through quarterly results. 

In recent quarters, Yum brands have performed remarkably well in domestic markets despite an uptick in health conscious Americans. This comes on the back of strong sales growth throughout its Taco Bell division. The introduction of new menu items and a breakfast category have already surpassed expectations. Last quarter, Taco bell posted a 4% increase in comps followed by KFC with a 3% increase and Pizza Hut at 1%. The success of these brands have only partially offset sluggish growth in China and India. Recently, Yum issued soft guidance in its international markets as it recovers from a slew of food safety scares over the last two years. International sales will also come with the negative impact of currency headwinds, which should subside as the year goes on and the US dollar stabilizes. Later this year Yum will spin off its China business into its own separate entity, which many believe will unlock huge value. Apart from China, the company witnessed a comp decline in its equally important India division.