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Yum! Brands Beats on EPS But GAAP Results Lag

By Seth Jayson - Updated Apr 10, 2017 at 1:42PM

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Just the facts, Fool.

Yum! Brands (NYSE: YUM) reported earnings on April 23. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 23 (Q1), Yum! Brands met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped. Non-GAAP earnings per share dropped. GAAP earnings per share dropped significantly.

Gross margins grew, operating margins shrank, net margins dropped.

Revenue details
Yum! Brands reported revenue of $2.54 billion. The 21 analysts polled by S&P Capital IQ expected sales of $2.56 billion on the same basis. GAAP reported sales were 7.6% lower than the prior-year quarter's $2.74 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.70. The 25 earnings estimates compiled by S&P Capital IQ forecast $0.60 per share. Non-GAAP EPS of $0.70 for Q1 were 7.9% lower than the prior-year quarter's $0.76 per share. GAAP EPS of $0.72 for Q1 were 25% lower than the prior-year quarter's $0.96 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 52.7%, much better than the prior-year quarter. Operating margin was 18.7%, 100 basis points worse than the prior-year quarter. Net margin was 13.3%, 340 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $3.02 billion. On the bottom line, the average EPS estimate is $0.57.

Next year's average estimate for revenue is $13.72 billion. The average EPS estimate is $3.04.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 3,183 members out of 3,316 rating the stock outperform, and 133 members rating it underperform. Among 803 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 779 give Yum! Brands a green thumbs-up, and 24 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Yum! Brands is outperform, with an average price target of $71.30.

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Yum! Brands, Inc. Stock Quote
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