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Yum China (YUMC) Q2 Earnings Top, Revenues Lag, Rise Y/Y
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Yum China Holdings, Inc. (YUMC - Free Report) reported mixed second-quarter 2024 results, with adjusted earnings beating the Zacks Consensus Estimate while total revenues missed the same. That said, the bottom and top lines increased on a year-over-year basis.
The quarter’s performance was driven by robust total system sales growth primarily attributable to net new unit contributions. The company’s focus on value-for-money and innovative new products, automation and AI accompanied by favorable pricing and lower delivery fees boded well. The initiatives undertaken to improve operational efficiency and stabilize restaurant margin are encouraging for YUMC’s growth prospects in 2024 and beyond.
Earnings & Revenue Discussion
Yum China reported adjusted earnings per share of 55 cents, which beat the Zacks Consensus Estimate of 47 cents by 17%. The bottom line moved up 17% from a year ago.
Total revenues of $2.68 billion missed the consensus mark of $2.77 billion by 3.3%. On the other hand, the top line inched up 1% on a year-over-year basis. Excluding foreign currency translation, revenues increased 4% year over year.
Total system sales (excluding foreign currency translation) increased 4% year over year. The upside was attributable to the net new unit contribution of 8%. System sales at KFC and Pizza Hut increased 5% and 1% (excluding foreign currency translation) year over year, respectively.
During the quarter, YUMC's same-store sales reached 96% of the previous year's level. Same-store transactions grew 4% on a year-over-year basis.
Operating Highlights
Total costs and expenses amounted to $2.413 billion compared with $2.397 billion reported in the prior-year quarter.
The restaurant margin was 15.5% compared with 16.1% a year ago.
Adjusted operating profit totaled $266 million compared with $259 million a year ago. Adjusted net income amounted to $212 million compared with $199 million in the prior-year quarter.
Balance Sheet
As of Jun 30, 2024, Yum China’s cash and cash equivalents were $1.043 billion compared with $1.128 billion as of Dec 31, 2023. Net inventories were $362 million compared with $424 million as of Dec 31, 2023.
In the second quarter, the company repurchased 5.1 million shares for $187 million. As of Jun 30, the company had $666 million available for future share repurchases under the current authorization program.
Management declared a quarterly cash dividend of 16 cents per common share. The dividend will be payable on Sep 17 to shareholders of record as of the close of business on Aug 27, 2024.
Unit Development and Other Updates
In the second quarter, Yum China opened 401 net new stores. As of Jun 30, the total restaurant count reached 15,423, including 10,931 KFC stores and 3,504 Pizza Hut stores.
Yum China’s delivery contributed approximately 38% to KFC and Pizza Hut's company sales.
Digital orders contributed about 90% to the total company sales, with 89% to KFC sales and 93% to Pizza Hut sales. Loyalty programs of KFC and Pizza Hut led to year-over-year growth by increasing to more than 495 million members.
2024 Outlook Retained
Yum China still projects net new store openings to be in the range of 1,500-,1700. Management continues to project capital expenditures to be between $700 million and $850 million.
Zacks Rank & Recent Retail-Wholesale Releases
Yum China currently carries a Zacks Rank #4 (Sell).
The Wendy’s Company (WEN - Free Report) reported dismal second-quarter fiscal 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. On a year-over-year basis, the top line rose while the bottom line declined. Solid same-restaurant sales and strength in U.S. breakfast sales and digital sales momentum aided the company’s performance.
The company continues to focus on industry-leading quality, innovation and value. It aims to maintain a customer-first approach while driving its restaurant economic model throughout the year and beyond.
Shake Shack Inc. (SHAK - Free Report) posted decent second-quarter fiscal 2024 results, with earnings meeting the Zacks Consensus Estimate and revenues beating the same. The bottom and top lines increased on a year-over-year basis. During the quarter, the company benefited from product innovations, strategic menu pricing, technology implementations and promotions.
Looking ahead, SHAK is committed to achieving efficiency across regions and formats by utilizing drive-throughs and third-party delivery. The company plans to reduce build costs by 10% in 2024 and further lower costs in 2025, enabling the exploration of new real estate options while maintaining returns. It intends to achieve strong unit-level economics and boost ROI, fostering long-term shareholder value creation.
The Cheesecake Factory Incorporated (CAKE - Free Report) reported second-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The bottom and top lines increased from the prior-year quarter’s figure.
During the quarter, CAKE stated benefits from strong demand and sales performance of new restaurant openings. Also, improvements in food efficiencies, labor productivity, overtime and wage management enhanced restaurant-level profitability. The company emphasizes strengthening its operational service to drive long-term growth.
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Yum China (YUMC) Q2 Earnings Top, Revenues Lag, Rise Y/Y
Yum China Holdings, Inc. (YUMC - Free Report) reported mixed second-quarter 2024 results, with adjusted earnings beating the Zacks Consensus Estimate while total revenues missed the same. That said, the bottom and top lines increased on a year-over-year basis.
The quarter’s performance was driven by robust total system sales growth primarily attributable to net new unit contributions. The company’s focus on value-for-money and innovative new products, automation and AI accompanied by favorable pricing and lower delivery fees boded well. The initiatives undertaken to improve operational efficiency and stabilize restaurant margin are encouraging for YUMC’s growth prospects in 2024 and beyond.
Earnings & Revenue Discussion
Yum China reported adjusted earnings per share of 55 cents, which beat the Zacks Consensus Estimate of 47 cents by 17%. The bottom line moved up 17% from a year ago.
Total revenues of $2.68 billion missed the consensus mark of $2.77 billion by 3.3%. On the other hand, the top line inched up 1% on a year-over-year basis. Excluding foreign currency translation, revenues increased 4% year over year.
Yum China Price, Consensus and EPS Surprise
Yum China price-consensus-eps-surprise-chart | Yum China Quote
Total system sales (excluding foreign currency translation) increased 4% year over year. The upside was attributable to the net new unit contribution of 8%. System sales at KFC and Pizza Hut increased 5% and 1% (excluding foreign currency translation) year over year, respectively.
During the quarter, YUMC's same-store sales reached 96% of the previous year's level. Same-store transactions grew 4% on a year-over-year basis.
Operating Highlights
Total costs and expenses amounted to $2.413 billion compared with $2.397 billion reported in the prior-year quarter.
The restaurant margin was 15.5% compared with 16.1% a year ago.
Adjusted operating profit totaled $266 million compared with $259 million a year ago. Adjusted net income amounted to $212 million compared with $199 million in the prior-year quarter.
Balance Sheet
As of Jun 30, 2024, Yum China’s cash and cash equivalents were $1.043 billion compared with $1.128 billion as of Dec 31, 2023. Net inventories were $362 million compared with $424 million as of Dec 31, 2023.
In the second quarter, the company repurchased 5.1 million shares for $187 million. As of Jun 30, the company had $666 million available for future share repurchases under the current authorization program.
Management declared a quarterly cash dividend of 16 cents per common share. The dividend will be payable on Sep 17 to shareholders of record as of the close of business on Aug 27, 2024.
Unit Development and Other Updates
In the second quarter, Yum China opened 401 net new stores. As of Jun 30, the total restaurant count reached 15,423, including 10,931 KFC stores and 3,504 Pizza Hut stores.
Yum China’s delivery contributed approximately 38% to KFC and Pizza Hut's company sales.
Digital orders contributed about 90% to the total company sales, with 89% to KFC sales and 93% to Pizza Hut sales. Loyalty programs of KFC and Pizza Hut led to year-over-year growth by increasing to more than 495 million members.
2024 Outlook Retained
Yum China still projects net new store openings to be in the range of 1,500-,1700. Management continues to project capital expenditures to be between $700 million and $850 million.
Zacks Rank & Recent Retail-Wholesale Releases
Yum China currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Wendy’s Company (WEN - Free Report) reported dismal second-quarter fiscal 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. On a year-over-year basis, the top line rose while the bottom line declined. Solid same-restaurant sales and strength in U.S. breakfast sales and digital sales momentum aided the company’s performance.
The company continues to focus on industry-leading quality, innovation and value. It aims to maintain a customer-first approach while driving its restaurant economic model throughout the year and beyond.
Shake Shack Inc. (SHAK - Free Report) posted decent second-quarter fiscal 2024 results, with earnings meeting the Zacks Consensus Estimate and revenues beating the same. The bottom and top lines increased on a year-over-year basis. During the quarter, the company benefited from product innovations, strategic menu pricing, technology implementations and promotions.
Looking ahead, SHAK is committed to achieving efficiency across regions and formats by utilizing drive-throughs and third-party delivery. The company plans to reduce build costs by 10% in 2024 and further lower costs in 2025, enabling the exploration of new real estate options while maintaining returns. It intends to achieve strong unit-level economics and boost ROI, fostering long-term shareholder value creation.
The Cheesecake Factory Incorporated (CAKE - Free Report) reported second-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The bottom and top lines increased from the prior-year quarter’s figure.
During the quarter, CAKE stated benefits from strong demand and sales performance of new restaurant openings. Also, improvements in food efficiencies, labor productivity, overtime and wage management enhanced restaurant-level profitability. The company emphasizes strengthening its operational service to drive long-term growth.