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Why Investors Are Optimistic about Yum! Brands’ 4Q17 Earnings

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Dec. 4 2020, Updated 10:43 a.m. ET

Stock performance

Yum! Brands (YUM) is scheduled to announce its 4Q17 earnings before the market opens on February 8, 2018. The company’s stock price was trading at $82.63 at the close of trading on February 2, 2018, which represents 11.2% growth since the announcement of its 3Q17 earnings on November 2, 2017.

In 3Q17, Yum! Brands posted adjusted EPS (earnings per share) of $0.68 on revenues of $1.44 billion. The analysts’ EPS estimate was $1.39 and the revenue estimate was $1.39 billion. The company outperformed the analysts’ SSSG (same-store sales growth) estimate of 1.9% by posting SSSG of 3.0%.

The company’s better-than-expected 3Q17 earnings and the expectation of a decline in corporate taxes due to the enactment of the tax reform bill may have led to a rise in Yum! Brands’ stock price.

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Year-to-date performance

Yum! Brands’ stock price rose 28.9% in 2017. Since the beginning of 2018, the company’s stock price has increased 1.2%.

Yum! Brands’ peers Domino’s Pizza (DPZ) and Papa John’s (PZZA) have returned 13.5% and 9.0%, respectively, year-to-date. During the same period, the S&P 500 Index (SPX) and the Consumer Discretionary Select Sector SPDR Fund (XLY) returned 3.3% and 7.0%, respectively. XLY invests 10.3% of its holdings in restaurant and travel companies.

Series overview

With Yum! Brands’ 4Q17 earnings around the corner, we’ll look at analysts’ revenue and EPS expectations. We’ll also cover analysts’ expectations for the next four quarters. Finally, we’ll look at the company’s valuation multiple and analysts’ recommendations.

Next, we’ll look at analysts’ revenue expectations for 4Q17.

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