Yum! Brands (NYSE:YUM) Announces Quarterly Earnings Results

Yum! Brands (NYSE:YUM) issued its quarterly earnings data on Thursday. The restaurant operator reported $1.62 earnings per share (EPS) for the quarter, topping the consensus estimate of $1.58 by $0.04, FiscalAI reports. Yum! Brands had a net margin of 20.48% and a negative return on equity of 23.51%. The firm had revenue of $2.17 billion during the quarter, compared to the consensus estimate of $2.18 billion. During the same period last year, the business posted $1.44 earnings per share. The business’s revenue for the quarter was up 12.2% compared to the same quarter last year.

Here are the key takeaways from Yum! Brands’ conference call:

• Q2 results were solid excluding Pizza Hut: system sales grew 7%, units increased 6%, same-store sales rose 4%, and core operating profit grew 8%. Digital sales approached $9 billion, reaching 61% of system sales.
• KFC delivered 6% system sales growth, including 7% unit growth, and is on track for its best development year ever. Management is targeting stronger long-term same-store sales through global menu innovation, refreshed branding, loyalty expansion, and improved restaurant economics.
• Taco Bell U.S. same-store sales were down 2% quarter-to-date through July 27 following an industry-wide food-safety issue, and third-quarter equity restaurant margins are expected to decline to 19%–21%. Management said trends have improved steadily and expects the impact to be temporary.
• Pizza Hut’s sale for $2.7 billion is expected to close in August, allowing Yum! to focus on KFC, Taco Bell, and Habit. After paying down part of its revolver, management expects to allocate most remaining proceeds toward share repurchases, subject to market conditions.
• Yum! is expanding its Byte technology platform, loyalty programs, and AI capabilities to improve personalization, operating efficiency, and franchisee economics. Taco Bell’s digital mix reached 47%, while Voice AI was deployed in more than 900 Taco Bell restaurants.

Yum! Brands Stock Performance

Shares of Yum! Brands stock traded up $5.12 on Thursday, reaching $157.04. 3,308,018 shares of the stock were exchanged, compared to its average volume of 2,085,121. The firm has a market cap of $43.28 billion, a PE ratio of 25.33, a P/E/G ratio of 1.89 and a beta of 0.56. The firm’s 50 day moving average is $153.93 and its 200-day moving average is $156.73. Yum! Brands has a one year low of $137.33 and a one year high of $170.14.

Yum! Brands Announces Dividend

The company also recently announced a quarterly dividend, which was paid on Friday, June 12th. Stockholders of record on Wednesday, May 27th were given a $0.75 dividend. The ex-dividend date was Wednesday, May 27th. This represents a $3.00 annualized dividend and a dividend yield of 1.9%. Yum! Brands’s payout ratio is presently 48.39%.

Trending Headlines about Yum! Brands

Here are the key news stories impacting Yum! Brands this week:

• Positive Sentiment: Adjusted earnings exceeded expectations. Yum reported second-quarter adjusted EPS of $1.62, ahead of the roughly $1.58-$1.59 consensus and up from $1.44 a year earlier. Revenue increased 12.2% year over year to $2.17 billion, broadly in line with estimates. Yum! Brands Reports Second-Quarter Results
• Positive Sentiment: Taco Bell delivered strong pre-outbreak performance. Robust sales at Taco Bell, along with global expansion and restaurant-level margin performance, helped offset weaker results at Pizza Hut and drove the quarterly profit beat. Yum! Brands Q2 Earnings Beat Estimates on Taco Bell Strength
• Positive Sentiment: Management says Taco Bell traffic is recovering. The company has removed affected lettuce, emphasized food-safety actions, and is using discounts and new menu items to rebuild customer trust. Taco Bell same-store sales were down 2% quarter-to-date through July 27, but reports indicate the sharpest decline occurred shortly after the outbreak and demand has begun to improve. Taco Bell Parent Company Says Sales Already Recovering
• Neutral Sentiment: The outlook remains dependent on the outbreak’s duration. The reported quarter ended June 30 and largely predates the food-safety crisis, limiting its usefulness as a guide to current Taco Bell sales. Investors will watch for additional costs, brand damage, and the pace of traffic normalization. Cyclospora Outbreak Clouds Strong Earnings
• Negative Sentiment: Pizza Hut remains a weak spot, and the company’s revenue was slightly below some analyst estimates. The outbreak also creates near-term uncertainty for Yum’s most important growth brand despite the early recovery signals.

Yum! Brands declared that its Board of Directors has approved a stock repurchase plan on Tuesday, June 16th that permits the company to repurchase $4.00 billion in shares. This repurchase authorization permits the restaurant operator to purchase up to 9.4% of its stock through open market purchases. Stock repurchase plans are often a sign that the company’s management believes its shares are undervalued.

Wall Street Analyst Weigh In

YUM has been the subject of several research reports. Weiss Ratings cut Yum! Brands from a “buy (b)” rating to a “buy (b-)” rating in a report on Tuesday. Citigroup upped their price objective on Yum! Brands from $175.00 to $178.00 and gave the company a “neutral” rating in a report on Sunday, July 12th. UBS Group reissued a “buy” rating on shares of Yum! Brands in a report on Thursday, June 18th. Wells Fargo & Company boosted their target price on shares of Yum! Brands from $160.00 to $165.00 and gave the company an “equal weight” rating in a research report on Thursday, April 30th. Finally, Royal Bank Of Canada restated a “sector perform” rating and issued a $165.00 price target on shares of Yum! Brands in a research note on Monday, April 20th. Eleven analysts have rated the stock with a Buy rating and seven have given a Hold rating to the stock. According to MarketBeat.com, the stock currently has a consensus rating of “Moderate Buy” and a consensus price target of $174.81.

Insiders Place Their Bets

In other Yum! Brands news, CEO Christopher Lee Turner sold 270 shares of the business’s stock in a transaction that occurred on Monday, June 1st. The shares were sold at an average price of $148.14, for a total transaction of $39,997.80. Following the completion of the transaction, the chief executive officer directly owned 64,282 shares in the company, valued at $9,522,735.48. The trade was a 0.42% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Scott Mezvinsky sold 277 shares of the company’s stock in a transaction on Friday, May 1st. The stock was sold at an average price of $160.48, for a total value of $44,452.96. Following the sale, the chief executive officer owned 483 shares of the company’s stock, valued at $77,511.84. The trade was a 36.45% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 12,423 shares of company stock valued at $1,953,721 over the last three months. 0.14% of the stock is owned by corporate insiders.

Institutional Trading of Yum! Brands

Hedge funds have recently added to or reduced their stakes in the stock. State Street Corp lifted its stake in shares of Yum! Brands by 1.0% in the 4th quarter. State Street Corp now owns 13,164,814 shares of the restaurant operator’s stock valued at $1,991,573,000 after acquiring an additional 124,720 shares during the last quarter. Morgan Stanley raised its holdings in Yum! Brands by 2.4% in the 4th quarter. Morgan Stanley now owns 4,471,127 shares of the restaurant operator’s stock valued at $676,392,000 after buying an additional 104,512 shares during the last quarter. Invesco Ltd. boosted its position in Yum! Brands by 42.2% during the 4th quarter. Invesco Ltd. now owns 4,183,964 shares of the restaurant operator’s stock worth $632,950,000 after buying an additional 1,240,777 shares during the period. Northern Trust Corp boosted its position in Yum! Brands by 5.6% during the 3rd quarter. Northern Trust Corp now owns 3,348,846 shares of the restaurant operator’s stock worth $509,025,000 after buying an additional 176,221 shares during the period. Finally, Sustainable Growth Advisers LP grew its holdings in Yum! Brands by 4.0% during the 3rd quarter. Sustainable Growth Advisers LP now owns 2,735,106 shares of the restaurant operator’s stock worth $415,736,000 after acquiring an additional 104,336 shares during the last quarter. Institutional investors and hedge funds own 82.37% of the company’s stock.

Yum! Brands Company Profile

Yum! Brands, Inc (NYSE: YUM) is a global quick-service restaurant company that develops, operates and franchises a portfolio of well-known restaurant brands. The company’s principal brands are KFC, Pizza Hut and Taco Bell, each focused on distinct product categories—KFC on fried chicken and related menu items, Pizza Hut on pizza and complementary offerings, and Taco Bell on Mexican-inspired quick-service food. Yum! is headquartered in Louisville, Kentucky and was formed as Tricon Global Restaurants in 1997 when PepsiCo spun off its restaurant businesses, later adopting the Yum! Brands name.

The company’s operating model centers on brand development, system growth and franchising; a large portion of its restaurants are operated by independent franchisees, and Yum! generates revenue through franchise royalties and fees in addition to sales from company-operated locations.