A month has gone by since the last earnings report for Yum Brands (YUM Quick QuoteYUM - Free Report) . Shares have lost about 4.6% 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 the most recent earnings report in order to get a better handle on the important drivers.

YUM! Brands Q2 Earnings Beat, Revenues Miss Estimates

YUM! Brands reported mixed second-quarter 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. The top and the bottom lines increased on a year-over-year basis.

Earnings and Revenue Discussion

In second-quarter 2023, the company's adjusted earnings per share (EPS) came in at $1.41, surpassing the Zacks Consensus Estimate of $1.23. The metric jumped 33% from the prior year quarter.

Quarterly revenues of $1,687 million missed the consensus estimate of $1,749 million. However, the top line climbed 3% year over year. The upside can be attributed to an increase in revenues across its operating divisions.

Worldwide system sales — excluding foreign currency translation — rose 13% year over year, with Taco Bell, KFC and Pizza Hut rising 7%, 19% and 7% year over year, respectively.

Divisional Performance

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

For second-quarter 2023, revenues from KFC totaled $682 million, up 1% from the prior-year quarter. Comps in the division climbed 13% year over year against a decline of 1% reported in the previous quarter.

The segment's operating margin expanded 450 basis points (bps) year over year to 47.7%. In the quarter under review, the KFC Division opened 600 gross new restaurants in 60 countries.

At Pizza Hut, revenues amounted to $242 million, up 3% year over year. Comps in the quarter increased 4% year over year against a decline of 3% in the prior-year quarter.

The segment's operating margin declined 190 bps year over year to 37.3%. The Pizza Hut division opened 357 gross new restaurants in 42 countries in the quarter under review.

Taco Bell's revenues were $621 million, up 6% from the year-ago quarter's levels. Comps in the segment rose 4% year over year compared with 8% growth reported in the year-ago quarter. Segmental operating margin expanded 10 bps year over year to 36.8%.

Taco Bell opened 63 gross new restaurants in 9 countries in the quarter under review.

In the second quarter, the Habit Burger Grill division’s revenues amounted to $142 million compared with $138 million reported in the previous quarter. Comps in the division were flat year over year. This division opened 5 gross new restaurants in the United States.

Other Financial Details

As of Jun 30, 2023, cash and cash equivalents totaled $437 million compared with $367 million at 2022-end. Long-term debt, as of Jun 30, 2023, was $11,194 million compared with $11,453 million as of the end of 2022.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Yum has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.