Yum! Brands Inc. (NYSE: YUM) has confirmed that it will release its quarterly earnings results on Tuesdays, February 8, 2022, after the market closes.
What to look for
The company indicated that the delta variant spread had weakened demand for its chicken, pizza, and tacos across Asia in the past quarter. However, interestingly the company reported that it was witnessing increased digital sales momentum, with system-wide digital sales hitting $5 billion during the quarter. When the company reports its Q4 2021 earnings, investors will be keen to see how it steered through the challenges and whether it managed to grow sales and earnings.
Earnings: Stockearning’s Estimated EPS for Q4 2021 is expected to be around $1.08 per share. In the last quarter, the company announced earnings of $1.22 per share, topping consensus estimates of $1.08. historical EPS Performance shows that in the past 12 quarters, the company has topped earnings estimates eight times (66%), matched estimates once (8%), and missed thrice (25%).
Revenue: The company is expected to post-sales ranging between $1.85 billion and $1.95 billion compared to sales of $1.74 billion in the same quarter a year ago, representing a growth of 7.5%. In the third quarter, the company topped consensus sales estimates for $1.59 billion to report net sales of $1.61 billion, representing a YoY growth of 11%. For the full year, the company expects to report revenue of $6.67 billion, and for next year, sales are expected to range between $6.95 billion and $7.18 billion.
Stock movement: YUM shares have lost 2.8% since the company released its third-quarter earnings. Interestingly, YUM shares have been DOWN 24 times out of the past 47 quarters. So, the historical price reaction suggests a 51% probability of the share price going DOWN once the company reports its fiscal Q4 2021 earnings. According to the Stockearning algorithm, the predicted first-day move is 3%, while the predicted move on the seventh day is 4%.
What analysts are saying
BofA analyst Sara Senatore reinstated coverage on YUM with a Hold rating with a price target of $157. The analyst told investors on a research note that Yum! Brands is executing well despite challenging comps ahead amid the spike in home consumption at the beginning of the pandemic, and the maturity of its operations in China could impact unit growth.
However, Senatore added that Yums! Brands' upside in EBITDA stability is possibly “limited.” Barclays analyst Jeffrey Bernstein increased his price target on YUM from $133 to $140 but maintained a Hold rating on the stock. Bernstein anticipates "more tailwinds than headwinds" this year for restaurants. In a research note, the analyst told investors that pandemic concerns are easing with little impact on sales, food inflation is plateauing and easy compares ahead, easing labor shortages, and labor inflation will resume normalized increases after the 2021 wage reset.
Oppenheim analyst B. Bittner analysts dropped the company’s Q4 2021 EPS estimates in a research note to investors on Friday, January 7, 2022. Bittner now expects the company to post EPS of $1.07 per share, down from the previous estimate of $1.18. The firm expects Yum! Brands’ Q1 2022 earnings to be $1.12 per share, Q2 2022 earnings of $1.23, Q3 2022 earnings of $1.22, and Q4 2022 EPS of $1.32. For the full year, Oppenheimer expects EPS of $4.89 and EPS of $5.6 per share in FY2023.
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