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Preview: Yum China Holdings's Earnings

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Yum China Holdings (NYSE:YUMC) releases its next round of earnings this Wednesday, February 03. Here is Benzinga's essential guide to Yum China Holdings's Q4 earnings report.

Net Income, Earnings, And Earnings Per Share

Earnings and especially earnings per share (EPS) are useful measures of a company's profitability. Total earnings, which is also referred to as net income, equals total revenue minus total expenses. EPS equals to net income divided by the number of shares outstanding.

Earnings And Revenue

Sell-side analysts expect Yum China Holdings's EPS to be near $0.26 on sales of $2.19 billion. Yum China Holdings earnings in the same period a year ago was $0.25 per share. Quarterly sales came in at $2.03 billion.

Why Analyst Estimates And Earnings Surprises Are Important

Wall Street analysts who study this company will publish analyst estimates of revenue and EPS. The averages of all analyst EPS and revenue estimates are called the "consensus estimates"; these consensus estimates can have a significant effect on a company's performance during an earnings release. When a company posts earnings or revenue above or below a consensus estimate, it has posted an "earnings surprise", which can really move a stock depending on the difference between actual and estimated values.

View more earnings on YUMC

If the company were to report earnings in line when it publishes results Wednesday, earnings would be up 4.0%. Sales would be up 7.93% from the same quarter last year. The company's reported EPS has stacked up against analyst estimates in the past like this:

EPS Estimate

0.49

0.24

-0.18

0.19

EPS Actual

0.66

0.35

0.16

0.25

Revenue Estimate

2.30 B

1.96 B

1.56 B

2.03 B

Revenue Actual

2.35 B

1.90 B

1.75 B

2.03 B

Stock Performance

Over the last 52-week period, shares are up 33.05%. Given that these returns are generally positive, long-term shareholders can be content going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Yum China Holdings is scheduled to hold the call at 16:30:00 ET and can be accessed here.

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