U.S. Markets open in 1 hr 22 mins

Yum! Brands: Why Are Investors Confident before 1Q16 Results?

Ralph Nathan

Will Yum! Brands Keep Up the Momentum in Its 1Q16 Earnings?

1Q16 stock performance

Yum! Brands (YUM) develops, operates, franchises, and licenses Pizza Hut, KFC, and Taco Bell brands. On April 20, 2016, it’s expected to announce its 1Q16 results after the Market closes.

Since the announcement of its 4Q15 results on February 3, 2016, Yum! Brands stock has risen more than 13.7%. McDonald’s (MCD), Domino’s Pizza (DPZ), and Papa John’s (PZZA) share prices have risen 20.4%, 5.3%, and 21.7%, respectively. During the same period, share prices of the Guggenheim S&P 500 Pure Growth ETF (RPG) rose 8.2% RPG has 44% of its holdings invested in restaurants and travel companies.

In 2014, Yum! Brands was hit by food-quality issues in China. It was the second such incident for the company in the last few years. To reduce the risks of an exposure to China, YUM management is planning to spin off its China Division by the end of 2016. This seems to have increased investor confidence. Share prices have been on the rise since the beginning of 2016.

Series overview

With fiscal 1Q16 results just around the corner, this pre-earnings series on Yum! Brands will focus on what to expect in the earnings release. The series will cover analysts’ estimates on revenue, EBIT (earnings before interest and taxes) margins, and EPS (earnings per share). To wrap up this series, we’ll look at the company’s valuation multiple and the expected stock price for Yum! Brands (YUM) over the next 12 months.

Let’s start by seeing what analysts are expecting for Yum! Brands’ revenue in 1Q16.

Continue to Next Part

Browse this series on Market Realist: