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Yum! Brands (YUM) to Report Q4 Earnings: A Beat in Store?
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We expect Yum! Brands, Inc. (YUM - Free Report) to beat expectations when it reports fourth-quarter and full-year 2016 numbers on Feb 9, before the opening bell.
Last quarter, Yum! Brands earnings were in line with the Zacks Consensus Estimate. Before that, the company had surpassed earnings estimates in each of the three trailing quarters, bringing the average surprise in last four quarters to a positive 4.71%.
Let’s see how things are shaping up for this announcement.
Our proven model shows that Yum! Brands’ is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Earnings ESP for Yum! Brands’ stands at +2.78% because the Most Accurate estimate is 74 cents, while the Zacks Consensus Estimate is pegged at 72 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Yum! Brands currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Yum! Brands’ Zacks Rank #3 and +2.78% ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
The spin-off of the Yum! Brands’ China business into an independent, publicly-traded company on Oct 31, 2016, somewhat deterred the company’s growth in the quarter.
Nonetheless, efforts to subsidize the effects of the spin-off by driving growth at KFC, Pizza Hut and Taco Bell brands via various digital initiatives, further international expansion and by refranchising a major portion of its business should boost the quarterly results.
Particularly, we expect Yum! Brands’ U.S. division comps to continue to be strong in the to-be-reported quarter. Taco Bell’s expanded line of breakfast offerings should drive comps, while Pizza Hut comps will likely benefit from menu innovation and digital initiatives. Meanwhile, KFC’s revamping of outlets and introduction of healthier menu items are expected to continue boosting up comps.
However, slowdown in emerging markets could dent sales while negative currency translation might hurt earnings. Additionally, a soft consumer spending environment in the U.S. restaurant space might further restrict revenue growth of the company.
Other Stocks to Consider
Yum! Brands’ is not the only company looking up this earnings season. Here are some other companies to consider from the Zacks categorized Retail–Restaurants industry, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Papa John’s International, Inc. (PZZA - Free Report) has an Earnings ESP of +1.52% and a Zacks Rank #2.
Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +2.42% and a Zacks Rank #3.
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Yum! Brands (YUM) to Report Q4 Earnings: A Beat in Store?
We expect Yum! Brands, Inc. (YUM - Free Report) to beat expectations when it reports fourth-quarter and full-year 2016 numbers on Feb 9, before the opening bell.
Last quarter, Yum! Brands earnings were in line with the Zacks Consensus Estimate. Before that, the company had surpassed earnings estimates in each of the three trailing quarters, bringing the average surprise in last four quarters to a positive 4.71%.
Let’s see how things are shaping up for this announcement.
Yum! Brands, Inc. Price and EPS Surprise
Yum! Brands, Inc. Price and EPS Surprise | Yum! Brands, Inc. Quote
Why a Likely Positive Surprise?
Our proven model shows that Yum! Brands’ is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Earnings ESP for Yum! Brands’ stands at +2.78% because the Most Accurate estimate is 74 cents, while the Zacks Consensus Estimate is pegged at 72 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Yum! Brands currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Yum! Brands’ Zacks Rank #3 and +2.78% ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
The spin-off of the Yum! Brands’ China business into an independent, publicly-traded company on Oct 31, 2016, somewhat deterred the company’s growth in the quarter.
Nonetheless, efforts to subsidize the effects of the spin-off by driving growth at KFC, Pizza Hut and Taco Bell brands via various digital initiatives, further international expansion and by refranchising a major portion of its business should boost the quarterly results.
Particularly, we expect Yum! Brands’ U.S. division comps to continue to be strong in the to-be-reported quarter. Taco Bell’s expanded line of breakfast offerings should drive comps, while Pizza Hut comps will likely benefit from menu innovation and digital initiatives. Meanwhile, KFC’s revamping of outlets and introduction of healthier menu items are expected to continue boosting up comps.
However, slowdown in emerging markets could dent sales while negative currency translation might hurt earnings. Additionally, a soft consumer spending environment in the U.S. restaurant space might further restrict revenue growth of the company.
Other Stocks to Consider
Yum! Brands’ is not the only company looking up this earnings season. Here are some other companies to consider from the Zacks categorized Retail–Restaurants industry, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Carrols Restaurant Group, Inc. has an Earnings ESP of +16.67% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Papa John’s International, Inc. (PZZA - Free Report) has an Earnings ESP of +1.52% and a Zacks Rank #2.
Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +2.42% and a Zacks Rank #3.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>