Yum! Brands' (YUM) Q3 Earnings Beat, Revenues Decline Y/Y

Yum! Brands, Inc. (NYSE:YUM) posted better-than-expected third-quarter 2017 results with both earnings and revenues surpassing the Zacks Consensus Estimate.

Earnings and Revenue Discussion

Adjusted earnings of 68 cents per share surpassed the Zacks Consensus Estimate of 66 cents by 3%. Further, earnings increased 22% year over year given lower share count.

Meanwhile, total revenues of $1.44 billion were down 5.4% year over year primarily due to lower company sales. However, revenues outpaced the Zacks Consensus Estimate of around $1.40 billion by nearly 3%.

Comps Discussion

From January 2016, the company’s India business integrated its three restaurant brands into the global KFC, Pizza Hut and Taco Bell divisions. Notably, on Oct 31, 2016, Yum! Brands’ completed the spin-off of the China business into an independent, publicly-traded company. Post-separation Yum! Brands now reports under three segments – KFC, Pizza Hut and Taco Bell.

Going forward, the company aims to drive growth at KFC, Pizza Hut and Taco Bell brands via its strategic transformation plan, following the separation of the company’s all-important China division. Markedly, the company’s transformation and growth strategy entails employing greater focus on the development of its three iconic global brands, increasing its franchise ownership, and creating a leaner and more efficient cost structure.

Comps at the KFC division were up 4% higher than the year-ago quarter and last quarter’s growth of 2% and 3%, respectively. Growth was witnessed across the United States as well as developed and emerging markets internationally.

Pizza Hut comps increased 1%, as against the year-ago quarter as well as last quarter’s dip of 1%. While comps grew 4% in international emerging markets, the same remained flat at international developed markets and in the United States.

Taco Bell comps increased 3% same as the year-ago quarter’s figure but comparatively lower than the 4% rise in the preceding quarter.

While restaurant margins improved at KFC and Taco Bell, it declined at the Pizza Hut division.

Yum! Brands carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

Yum! Brands, Inc. Price, Consensus and EPS Surprise | Yum! Brands, Inc. Quote

Peer Releases

McDonald's Corp. (NYSE:MCD) reported third-quarter adjusted earnings per share of $1.76, beating the Zacks Consensus Estimate of $1.75 by 0.6%. Earnings also increased 9% year over year, given stronger operating performance and G&A savings.

Darden Restaurants, Inc.’s (NYSE:DRI) first-quarter fiscal 2018 adjusted earnings of 99 cents per share outpaced the Zacks Consensus Estimate of 98 cents by over 1%. Further, the bottom line increased 12.5% year over year on the back of higher revenues.

Chipotle Mexican Grill, Inc.’s (NYSE:CMG) third-quarter 2017 adjusted earnings of $1.33 per share lagged the Zacks Consensus Estimate of $1.56 by 14.7%.

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