What Are Analysts Expecting from Yum! Brands in 2019?


Jun. 7 2019, Updated 3:54 p.m. ET

Analysts’ EPS estimates

For 2019, Yum! Brands’ (YUM) management expects to post adjusted EPS of $3.75. For the same period, analysts are expecting the company to post adjusted EPS of $3.83, which represents a rise of 20.8% from $3.17 in 2018.

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EPS drivers

Analysts expect expansion in EBIT margin, lower effective tax rate, and share repurchases to drive Yum! Brands’ EPS in 2019. However, the decline in revenue and higher interest expenses are likely to offset some of the increase in its EPS.

Yum! Brands’ revenue is projected to fall by 3.3% in 2019 to $5.50 billion. The refranchising of company-owned restaurants is likely to lower the company’s revenue this year. However, some of the declines could be offset by positive SSSG (same-store sales growth), and the net addition of new franchised restaurants.

Analysts forecast YUM’s EBIT margin to improve from 31.0% in 2018 to 35.6% in 2019. The growth in the high margin franchise business, sales leverage from positive SSSG, and lower G&A (general and administrative) expenses are likely to drive the company’s EBIT margin. Analysts are projecting Yum Brands’ effective tax rate for 2019 to come in at 19.3% compared to 20.3% in 2018.

In the first quarter, YUM had repurchased 1.1 million shares at a total cost of $106 million. By the end of the first quarter, the company had about $1.0 billion still available under its share repurchase program.

Peer comparisons

During the comparable period, analysts are expecting Domino’s Pizza (DPZ) to post EPS growth of 11.7%, while the EPS of Papa John’s (PZZA) is projected to fall by 13.7%.


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