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YUM! Brands (YUM) Stock Up on Q2 Earnings & Revenue Beat (Revised)

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YUM! Brands, Inc. YUM reported strong second-quarter 2021 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Both the metrics improved year over year. Following the results, the company’s shares are up 2.3% in pre-market trading session.

The company’s results in the quarter benefited from strong digital sales, record unit development and robust same-store sales. During the second quarter, the company reported digital sales of more than $5 billion.

Earnings and Revenue Discussion

During the second quarter, the company’s adjusted earnings of $1.16 beat the Zacks Consensus Estimate of 95 cents. In the prior-year quarter, the company had reported adjusted earnings of 82 cents.

Total revenues of $1,602 million surpassed the consensus estimate of $1,467 million. The top line improved 34% year over year. The upside can be attributed to increase in company sales, and rise in franchise and property revenues.

Worldwide system sales — excluding foreign currency translation — climbed 26% year over year with Taco Bell, KFC and Pizza Hut increasing 24%, 35% and 10%, respectively, year over year.

Yum Brands, Inc. Price, Consensus and EPS Surprise

Yum Brands, Inc. Price, Consensus and EPS Surprise
Yum Brands, Inc. Price, Consensus and EPS Surprise

Yum Brands, Inc. price-consensus-eps-surprise-chart | Yum Brands, Inc. Quote

Divisional Performance

YUM! Brands primarily reports results under four divisions — KFC, Pizza Hut, Taco Bell and Habit Burger Grill.

For second-quarter 2021, revenues from KFC totaled $682 million, up 67% year over year. Comps in the division increased 30% against the year-ago quarter’s decline of 21%.

This segment’s operating margin expanded 910 basis points (bps) year over year to 46.5%. The increase was primarily driven by solid comps, unit growth and lower bad debt expenses. In the quarter under review, KFC Division opened 522 gross new restaurants.

At Pizza Hut, revenues amounted to $249 million, up 6% on a year-over-year basis. Comps increased 10% in the reported quarter versus 9% fall in the prior-year quarter.

The segment’s operating margin expanded 450 bps year over year to 41.3%. The upside was primarily driven by solid same-store sales. Pizza Hut Division opened 210 gross new restaurants during the second quarter.

Taco Bell’s revenues were $532 million, up 19% from the year-ago quarter. Comps rose 21% in the reported quarter against the year-ago quarter’s decline of 8%. Its operating margin was up 280 bps year over year to 37.2%. It was primarily driven by higher comps growth and lower general and administrative expenses.

Taco Bell recorded 91 gross new restaurants openings during the quarter under review.

The Habit company sales amounted to $138 million during the second quarter. Comps in the division increased 31% year over year. In the quarter, the company opened four gross new restaurants in the United States and Cambodia.

Other Financial Details

Cash and cash equivalents as of Jun 30, 2021, totaled $552 million compared with $730 million on Dec 31, 2020. Long-term debt at the end of the reported quarter was $10,258 million compared with $10,272 million at year-end 2020.

Zacks Rank & Other Key Picks

YUM! Brands currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks, which warrant a look in the same space include The Cheesecake Factory Incorporated CAKE, Cracker Barrel Old Country Store, Inc. CBRL and Dine Brands Global, Inc. DIN. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cheesecake Factory earnings in 2021 is anticipated to witness growth of 253%.

Cracker Barrel earnings in fiscal 2021 is anticipated to witness growth of 163.7%.

Dine Brands Global has reported better-than-expected earnings in three of the trailing four quarters and missed once, the average surprise being 40.3%.

(We are reissuing this article to correct a mistake. The original article, issued earlier today, should no longer be relied upon.)


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