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Yum! Brands Up ~4% since Q1 Results: Can We Expect More Upside?

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Stock performance

On June 6, Yum! Brands (YUM) hit a 52-week high of $108.60 before closing the day at $108.42, which represents a rise of 3.9% since the announcement of its first-quarter earnings on May 1.

In the first quarter, Yum! Brands posted adjusted EPS of $0.82, beating analysts’ estimate of $0.81. Its revenue came in at $1.25 billion, which was in line with analysts’ estimates. The company reported overall SSSG (same-store sales growth) of 4.0%, outperforming analysts’ estimate of 2.7%.

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During the quarter, KFC posted SSSG of 5.0%, beating analysts’ estimate of 2.7%. However, the SSSG of Taco Bell and Pizza Hut were lower than expectations. Pizza Hut’s SSSG was flat against analysts’ expectation of a 0.5% rise, while Taco Bell posted SSSG of 4.0%, missing analysts’ expectations of 4.5%. The lower-than-expected SSSG in Pizza Hut and Taco Bell had led the company’s stock price to fall to a low of $98.95 on May 29. However, since then, the company’s stock has increased by 9.6%.

On June 4, the chair of the Federal Reserve, Jerome Powell, announced that the Fed is watching the impact of global trade on the US economy and is willing to act to support growth. Later, on June 6, Nation’s Restaurant News reported that the data collected from Black Box Intelligence indicated that the same-restaurant sales across restaurant brands rose 1.1% in May. In April, same-restaurant sales had fallen by 1.6%. These announcements appear to have contributed to a rise in YUM’s stock price.

Year-to-date performance

Yum! Brands has delivered a strong return this year, outperforming the broader equity market. YTD (year-to-date), YUM has returned 18.0%, while the S&P 500 Index has increased by 13.4% since the beginning of the year. In comparisons, YUM’s peers, Domino’s Pizza (DPZ) and Papa John’s (PZZA), have returned 15.7% and 27.1%, respectively.

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