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Yum (YUM) Down 6.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Yum Brands (YUM - Free Report) . Shares have lost about 6.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Yum due for a breakout? 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 drivers.
YUM! Brands Q4 Earnings Miss, Revenues Top Estimates
YUM! Brands reported mixed fourth-quarter 2021 results, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. The top line beat estimates for the ninth straight quarter.
The company’s results in the fourth quarter benefited from strong digital sales, robust unit development and a diversified global business model. During the quarter, the company reported digital sales of more than $6 billion. In 2021, the company recorded digital sales of $22 billion.
Earnings and Revenue Discussion
During fourth-quarter 2021, the company’s adjusted earnings of $1.02 missed the Zacks Consensus Estimate of $1.08. In the prior-year quarter, the company had reported adjusted earnings of $1.15.
Quarterly revenues of $1,890 million surpassed the consensus estimate of $1,873 million. The top line increased 8% year over year. The upside can be attributed to an increase in company sales and a rise in franchise and property revenues.
Worldwide system sales — excluding foreign currency translation — improved 9% year over year with Taco Bell, KFC and Pizza Hut increasing 11%, 10% and 4%, respectively, year over year.
Divisional Performance
YUM! Brands primarily announces results under four divisions — KFC, Pizza Hut, Taco Bell and Habit Burger Grill.
For fourth-quarter 2021, revenues from KFC totaled $794 million, up 12% year over year. Comps in the division increased 5% year over year against the year-ago quarter’s decline of 2%.
The segment’s operating margin declined 10 basis points (bps) year over year to 37.5% primarily due to an increase in general and administrative expenses and higher company restaurant expenses. In the quarter under review, KFC Division opened 904 gross new restaurants.
At Pizza Hut, revenues amounted to $281 million, down 3% on a year-over-year basis. Comps increased 3% in the reported quarter versus a 1% fall in the prior-year quarter.
The segment’s operating margin expanded 50 bps year over year to 29.2%. The upside was driven by solid same-store sales. Pizza Hut Division opened 571 gross new restaurants during the fourth quarter.
Taco Bell’s revenues were $684 million, up 9% from the year-ago quarter’s levels. Comps in the segment increased 8% year over year compared with 1% growth in the year-ago quarter. Its operating margin declined 490 bps year over year to 28.9%. The downside was due to higher general and administrative and company restaurant expenses, partially offset by comps growth.
Taco Bell opened 195 gross new restaurants in the quarter under review.
The Habit company sales amounted to $131 million during the third quarter. Comps in the division increased 11% year over year. In the quarter, the company opened eight gross new restaurants in the United States.
Other Financial Details
As of Dec 31, 2021, cash and cash equivalents totaled $486 million compared with $730 million on Dec 31, 2020. Long-term debt at the end of the reported quarter was $11,178 million compared with $10,272 million at 2020-end.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -5.03% due to these changes.
VGM Scores
At this time, Yum has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Yum has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Yum (YUM) Down 6.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Yum Brands (YUM - Free Report) . Shares have lost about 6.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Yum due for a breakout? 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 drivers.
YUM! Brands Q4 Earnings Miss, Revenues Top Estimates
YUM! Brands reported mixed fourth-quarter 2021 results, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. The top line beat estimates for the ninth straight quarter.
The company’s results in the fourth quarter benefited from strong digital sales, robust unit development and a diversified global business model. During the quarter, the company reported digital sales of more than $6 billion. In 2021, the company recorded digital sales of $22 billion.
Earnings and Revenue Discussion
During fourth-quarter 2021, the company’s adjusted earnings of $1.02 missed the Zacks Consensus Estimate of $1.08. In the prior-year quarter, the company had reported adjusted earnings of $1.15.
Quarterly revenues of $1,890 million surpassed the consensus estimate of $1,873 million. The top line increased 8% year over year. The upside can be attributed to an increase in company sales and a rise in franchise and property revenues.
Worldwide system sales — excluding foreign currency translation — improved 9% year over year with Taco Bell, KFC and Pizza Hut increasing 11%, 10% and 4%, respectively, year over year.
Divisional Performance
YUM! Brands primarily announces results under four divisions — KFC, Pizza Hut, Taco Bell and Habit Burger Grill.
For fourth-quarter 2021, revenues from KFC totaled $794 million, up 12% year over year. Comps in the division increased 5% year over year against the year-ago quarter’s decline of 2%.
The segment’s operating margin declined 10 basis points (bps) year over year to 37.5% primarily due to an increase in general and administrative expenses and higher company restaurant expenses. In the quarter under review, KFC Division opened 904 gross new restaurants.
At Pizza Hut, revenues amounted to $281 million, down 3% on a year-over-year basis. Comps increased 3% in the reported quarter versus a 1% fall in the prior-year quarter.
The segment’s operating margin expanded 50 bps year over year to 29.2%. The upside was driven by solid same-store sales. Pizza Hut Division opened 571 gross new restaurants during the fourth quarter.
Taco Bell’s revenues were $684 million, up 9% from the year-ago quarter’s levels. Comps in the segment increased 8% year over year compared with 1% growth in the year-ago quarter. Its operating margin declined 490 bps year over year to 28.9%. The downside was due to higher general and administrative and company restaurant expenses, partially offset by comps growth.
Taco Bell opened 195 gross new restaurants in the quarter under review.
The Habit company sales amounted to $131 million during the third quarter. Comps in the division increased 11% year over year. In the quarter, the company opened eight gross new restaurants in the United States.
Other Financial Details
As of Dec 31, 2021, cash and cash equivalents totaled $486 million compared with $730 million on Dec 31, 2020. Long-term debt at the end of the reported quarter was $11,178 million compared with $10,272 million at 2020-end.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -5.03% due to these changes.
VGM Scores
At this time, Yum has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Yum has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.