Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Yum! Brands Earnings: An Early Look

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

With hundreds of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Yum! Brands (NYSE: YUM  ) . The company behind KFC, Taco Bell, and Pizza Hut has spent the past few years expanding into international markets, even as its domestic business has lagged behind. Let's take an early look at what's been happening with Yum! Brands over the past quarter and what we're likely to see in its quarterly report next Monday.

Stats on Yum! Brands

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$4.11 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can Yum! Brands feed investors a healthy report?
Analysts have slowly ratcheted down their estimates on Yum! in recent months, but to no greater extent than they generally have for most stocks. Yum!'s share price has pulled back considerably, though, with an 8% drop since late October.

We've already gotten an initial taste at what Yum!'s fourth quarter looked like. In early January, the company preannounced its expected full-year earnings per share of $3.24, excluding any special items. The SEC filing also called out particular weakness in China, blaming a government inquiry into the poultry supply as hurting KFC China's sales and leading the company to reduce its same-store sales estimates in the emerging nation from a decline of 4% to a fall of 6%. Given that investors bid down the shares by 10% when Yum! first discussed the impact of the Chinese slowdown in November, a key element of its earnings release will be its guidance for China for the coming year.

But Yum! is responding by bringing ambitious new plans in its domestic market. Investing guru David Einhorn believes that Taco Bell's new food lines are successfully competing against Chipotle Mexican Grill (NYSE: CMG  ) , which has seen its own growth slow in the face of high ingredient costs. Yum! is also taking aim at McDonald's (NYSE: MCD  ) , which has seen great success with its dollar value menu, by adopting a "$1 cravings" menu of its own.

Yum! hasn't given up on international growth, turning to little-tapped markets for potential gains. The fast-food company seems to be following Coca-Cola's (NYSE: KO  ) game plan, as the soft-drink giant has targeted the Middle East as a potential growth center that it has largely ignored until now. For its part, Yum! expects to launch 150 new restaurants in Africa to go with its Chinese expansion.

In its earnings, Yum! needs to show that it's laying the foundation for a turnaround in China. If it can do so while building optimism about its U.S. prospects, then Yum! may be able to earn back much of its stock's lost ground.

Who will win in China?
Both Yum! and McDonald's are pushing hard for dominance in the Chinese fast-food market. Find out how McDonald's plans to beat Yum! in China by reading our premium research report on the Golden Arches today. Inside, you'll get the latest from our restaurant analyst on the steps McDonald's is taking to bolster its flagging growth. Click here now and get in the know today.

Click here to add Yum! Brands to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2231317, ~/Articles/ArticleHandler.aspx, 9/28/2016 6:53:30 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 9 hours ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:01 PM
YUM $89.86 Up +0.34 +0.38%
Yum! Brands CAPS Rating: ****
CMG $418.95 Down -0.93 -0.22%
Chipotle Mexican G… CAPS Rating: ****
KO $42.59 Up +0.54 +1.28%
Coca-Cola CAPS Rating: ****
MCD $116.88 Up +0.35 +0.30%
McDonald's CAPS Rating: ***