Factors Setting the Tone for YUM! Brands' (YUM) Q3 Earnings

Zacks Equity Research
·3-min read

YUM! Brands, Inc. YUM is scheduled to report third-quarter 2020 results on Oct 29, before the opening bell. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 57.7%.

Q3 Estimates

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share declined to 79 cents from 78 cents in the past 60 days. This indicates a decline of 1.3% from 80 cents per share reported in the year-ago quarter.

The consensus mark for revenues stands at $1.44 billion, suggesting growth of 7.5% from $1.34 billion reported in the prior-year quarter.

Factors to Note

Yum! Brands’ third-quarter performance is likely to have benfited from strong digitization, delivery services and global expansion. Robust performance of Taco Bells and Pizza Hut is likely to have contributed to the company’s top line. The Zacks Consensus Estimate for revenues at Pizza Hut and Taco Bell segments is pegged at $248 million and $518 million, suggesting year-over-year growth of 2.9% and 5.9%, respectively. However, the consensus mark for revenues at KFC stands at $569 million, indicating a decline of 7% from the year-ago quarter.

Yum! Brands’ partnership with online food delivery platform Grubhub might have boosted online sales and delivery from its restaurants. Additionally, the company implemented various digital features in mobile and online platforms across all brand segments to enhance guest experience. The company has also been working toward accelerating its delivery services and the results have been positive so far. At the end of second-quarter 2020, the company had more than 34,000 restaurants offering delivery globally, up 13% year over year. However, high costs and dismal traffic may have weighed on the to-be-reported quarter’s performance.

Yum Brands, Inc. Price and EPS Surprise

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

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

Quantitative Model Prediction

Our proven model conclusively predicts 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 chances of an earnings beat.

Earnings ESP: Yum! Brands has an Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, of +0.42%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Yum! Brands currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Poised to Beat Earnings Estimates

Here are some other stocks from the Zacks Retail-Wholesale space that investors may consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

Chuy's Holdings, Inc. CHUY currently has a Zacks Rank #1 and an Earnings ESP of +2.49%.

McDonald's Corporation MCD has a Zacks rank #3 and an Earnings ESP of +1.08%.

Papa John's International, Inc. PZZA has a Zacks Rank #3 and an Earnings ESP of +0.52%.

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