Could Yum! Brands’ 2Q16 Results Boost Its Share Price?



Yum! Brands’ operations

Yum! Brands develops, operates, franchises, and licenses the Pizza Hut, KFC, and Taco Bell brands. On July 13, 2016, it’s to announce its 2Q16 results after the Market closes.

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YUM’s stock performance

Since the announcement of its 1Q16 results on April 20, 2016, YUM’s share price has increased by 1.2%. During the same period, the share prices of peers McDonald’s (MCD) and Domino’s Pizza (DPZ) declined by 6.1% and 4.3%, respectively, while Papa John’s (PZZA) share price increased by 16.4%.

The Brexit vote negatively affected the restaurant’s share price and led to a decline in the value of the British pound and euro against the US dollar. This decline will lower the revenue from European operations for US companies.

However, YUM’s announcement that the spin-off its China operations would be completed by October 31, 2016, boosted investor confidence and YUM’s share price increased. Food safety issues in China compelled YUM’s management to reduce the risks of exposure to the country and spin off its China operations to form a separate entity called Yum! China.

Series overview

With fiscal 2Q16 results just around the corner, this pre-earnings series on Yum! Brands will focus on what to expect in the earnings release. It will cover analysts’ estimates on revenue, EBIT (earnings before interest and tax) margins, and EPS (earnings per share). To wrap up this series, we’ll look at the company’s valuation multiple and the expected stock price for Yum! Brands (YUM) over the next 12 months. Let’s start by looking at analysts’ expectations for Yum! Brands’ revenue in 2Q16.


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