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YUM! Brands (YUM) to Report Q4 Earnings: What's in Store?

Zacks Equity Research

YUM! Brands, Inc. YUM is scheduled to report fourth-quarter 2019 results on Feb 6, before market open. In the last reported quarter, the company’s earnings lagged the Zacks Consensus Estimate by 14.9%.

How are Estimates Faring?

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share declined to $1.11 from $1.12 IN the past seven days. However, it indicates a surge of 177.5% from 40 cents per share reported in the year-ago quarter.

Revenues are expected to be at $1.67 billion, suggesting 7.1% increase from the year-ago quarter’s reported figure of $1.56 billion.

Factors at Play

Global unit growth across all the three segments namely — KFC, Pizza Hut and Taco Bell, digitalization and other sales building efforts are likely to get reflected in the company’s fourth-quarter top line..

Notably, YUM! Brands is focusing on transforming its Pizza Hut business to a modern delivery asset base in the United States. It is also restructuring and upgrading its franchisee base. This is likely to have impacted the Pizza Hut U.S. sales in the fourth quarter.

Coming to KFC U.S., partnership with Grubhub enhanced prospects for delivery and click-and-collect. The company’s improvement ideas and global best practices are likely to have driven sales in the said quarter.

Despite high cost of operations, franchising is likely to have aided YUM! Brands’ fourth-quarter 2019 earnings. We note that refranchising a large portion of the system reduces the company’s capital requirements as well as facilitates earnings per share growth and ROE expansion. Remarkably, shift to refranchising has substantially benefited YUM! Brands’ operating margin over the years.

What Does the Zacks Model Say?

Our proven model does not conclusively predict an earnings beat for YUM! Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: YUM! Brands has an Earnings ESP of -0.87%.

Zacks Rank: The company has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.

Yum! Brands, Inc. Price and EPS Surprise

 

Yum! Brands, Inc. Price and EPS Surprise

Yum! Brands, Inc. price-eps-surprise | Yum! Brands, Inc. Quote

 

Stocks Worth a Look

Here are a few stocks that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat in the fourth quarter.

Denny's Corporation DENN presently has a Zacks Rank #1 and an Earnings ESP of +5.00%.

Wingstop Inc. WING currently has an Earnings ESP of +1.12% and a Zacks Rank #3.

BJ's Restaurants, Inc. BJRI currently holds a Zacks Rank #3 and has an Earnings ESP of +2.03%.

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