Yum Brands Inc
Why more Europeans could be eating at McDonalds and Yum!
Employment could be turning around The below chart shows employment growth for countries in Europe. The Eurozone, which only includes countries using the euro (so, excluding the United Kingdom and Russia), has been experiencing a declining growth rate over the past two years. While the overall growth was in positive territory from mid-2010 to mid-2011, […]
Why Restaurant Operators Are Cautious About Business Conditions
According to the NRA, the restaurant operators will become “more cautious” towards business conditions over the next six months.
Could Yum! Brands’ Margins Increase in 1Q16?
With positive same-store sales growth expected in all three of YUM’s divisions, analysts are expecting the leverage to improve the company’s margins.
Why Analysts Say ‘Hold’ for Domino’s Stock ahead of Q1 Earnings
As of April 21, 2017, Domino’s Pizza (DPZ) was trading at $179.3. Domino’s stock price might have factored in the estimates we discussed in our previous articles.
Is Yum! Brands Headed for a Spin-Off?
Is YUM headed for a spin-off? On October 15, YUM announced the appointment of activist investor Keith A. Meister to its board. Earlier this year, Meister suggested that YUM spin off its China business.
US Retail Sales Flat in April on Rising Oil Prices, Yet XRT Up 1%
Retail sales in the United States in April didn’t see any growth over March’s sales figures. But the jobless claims reading brought some positive news for the consumer sector.
Why Did Domino’s EBIT Margin Decline in 2Q17?
For 2Q17, Domino’s (DPZ) posted EBIT (earnings before interest and tax) of $113.27 million, which represents an EBIT margin of 18.0%, compared with 18.9% in 2Q16.
Strength in Initial Jobless Claims Is Positive for Restaurants
Initial jobless claims can help us gauge the health of the US labor market. It indicates the number of people filing for unemployment.
Why Papa John’s Hit a 52-Week Low on July 23
On July 23, Papa John’s (PZZA) hit a 52-week low of $46.06 before closing the day at $46.56.
What Could Drive Starbucks’s Same-Store Sales Growth in 2016?
Over the past four quarters, Starbucks’s same-store sales growth has increased due to growth in ticket and traffic.
CBS gets position with Davidson Kempner
Davidson Kempner Capital Management initiated a new position in CBS Corporation (CBS) that accounted for 1.55% of the fund’s 3Q14 portfolio.
Must-know: Expectations about business conditions
The Expected Business Conditions Index is part of the Expectations Index. It measures restaurant operators’ outlook towards business conditions over the next six months.
Why Have Analysts Raised their Revenue Estimates for Papa John’s?
In 1Q16, PZZA’s domestic company-owned restaurants generated nearly 48% of Papa John’s revenue, while domestic commissaries and others generated 39.4%.
Beef Prices: 2015–2016 Outlook for the Restaurant Industry
Although beef prices recently increased slightly, they’ve been on a downtrend trend since the beginning of 2015. They’re expected to remain elevated for the rest of 2015.
Why Are Analysts Expecting Papa John’s EBITDA Margins to Expand in 2Q16?
Analysts expect Papa John’s (PZZA) to post EBITDA of $43.9 million in 2Q16. This represents an EBITDA margin of 10.6%, compared to 10.3% in 2Q15.
Starbucks Analysts: Their Ratings and Their Targets
Looking at analysts’ ratings for Starbucks, about 79% of analysts have “buy” recommendations for Starbucks, 21% have “hold” recommendations, and none has “sell” recommendations.
Domino’s Stock Fell 9% after Missing 1Q16 Earnings Estimates
Domino’s Pizza (DPZ) posted 1Q16 revenues of $539.2 million and adjusted EPS of $0.89.
Must-know: Bloomin’ Brands refreshes menu initiatives
Bloomin’ Brands (BLMN) refreshed Carrabba’s menu in the first half of 2014 with a price point and variety in mind.
Valuation Multiples of Key Restaurant Players
Where are some of the major restaurant companies such as Starbucks, Chipotle, Panera, and Yum! Brands trading from a valuation standpoint? Over the past month, US markets have experienced high volatility.
Yum! Brands’ Management Initiatives and Outlook for 2015
Management stated that it expects the second quarter EPS to lag by 20% YoY. It expects full-year EPS growth of 10% in 2015.
Papa John’s Revenue Estimates for the Next 4 Quarters
For the next four quarters, analysts expect Papa John’s (PZZA) to post revenue of $1.83 billion, which represents growth of 5.5%.
Six-Month Expansion Outlook Positive for Restaurant Operators
The six-month outlook for capital expenditure plans as of October 2014 was 101.8, which has been above 100 levels for the past 12 months.
Where Will Yum! Brands Trade in the Next Few Quarters?
Yum! Brands has a forward PE ratio of 25x. This indicates that the stock is valued fairly. It’s a stable company with a long history of EPS growth.
Should Investors Worry about Panera’s High Valuation?
In this part, we’ll look at how the company’s valuation PE (price-to-earnings multiple) affects Panera’s stock price.
Starbucks Adds 1,600 Units in 2014
In the fiscal year ending in 2014, SBUX added 1,599 units. This was 8% unit growth year-over-year, or YoY. The most units were added in the China and Asia-Pacific, or CAP, market.
Domino’s Pizza 2Q15 Earnings Release Beats Wall Street Estimates
Domino’s Pizza reported its 2Q15 earnings before the market opened on July 16. Its diluted EPS came in at $0.81, beating analysts’ consensus estimates of $0.79 per share.
Factors That Drove Papa John’s Same-Store Sales Growth in 1Q17
In 1Q17, Papa John’s (PZZA) restaurants in North America posted SSSG of 2%. Company-owned restaurants posted SSSG of 3%, and franchised restaurants posted SSSG of 1.7%.
Shake Shack’s Unit Growth: A Second Location in Las Vegas
Shake Shack stated that it will double its company-operated store count over the next three years. It expects that number to triple in the next five years.
Restaurant Capex Outlook Remains Elevated in May
The expected capital expenditure index increased by 0.9% to 100.8 in May from 101.7 in April.
Why Yum! Brands Is Expected To Report Lower EBITDA
Wall Street analysts’ estimated EBITDA for the fourth quarter is $633 million—compared to $918 million in the same quarter last year.
Why Do Analysts Recommend a ‘Hold’ for McDonald’s?
On April 22, 2016, McDonald’s (MCD), which forms 1.3% of the Vanguard Growth ETF (VUG), was trading at $125.5.
Why Papa John’s Earnings Margin Narrowed in 2Q17
Performance in 2Q17 In 2Q17, Papa John’s International (PZZA) posted EBIT (earnings before interest and tax) of $37.2 million, which represents an EBIT margin of 8.6%. In comparison, the company posted an EBIT margin of 8.7% in 2Q16. Why Papa John’s margins narrowed Papa John’s EBIT margins were impacted by a rise in the cost of […]
Why Investors Are Confident in YUM ahead of Its 3Q16 Results
Yum! Brands develops, operates, franchises, and licenses the Pizza Hut, KFC, and Taco Bell brands. It’s set to announce its 3Q16 results on October 5, 2016.
Franchising Dominates Papa John’s Expansion Plans
With 42 units added in the first two quarters of 2016, Papa John’s has maintained its 2016 guidance for unit growth at 180–200 units.
Yum! Brands’ 4Q15 Same-Store Sales Growth Is 2% in China
Following its dismal performance in 3Q15, Yum! decided to release its same-store sales growth performance for China on a monthly basis.
Comcast Moves To Boost Growth In Business Unit
In 3Q17, Comcast’s Business Services segment generated revenues of $1.6 billion, which rose 12.6% year-over-year.
Could Domino’s Earnings Rise in the Next 4 Quarters?
Earnings expectations For the next four quarters, analysts expect Domino’s Pizza (DPZ) to post EPS (earnings per share) of $6.14, which represents a growth of 22.3% from the EPS of $5.02 seen in the four quarters prior. EPS growth Domino’s EPS growth is expected to be driven by higher revenue, EBIT (earnings before interest and tax) […]
When Will Yum! Complete the Separation of Its China Division?
On October 20, Yum! announced that it will separate its China division from the rest of its business. It’s expected to complete this by the end of 2016.
What Boosted Yum! Brands Stock
Yesterday, Yum! Brands (YUM) hit a new 52-week high of $90.24 before closing at $89.88, which represents a 10.1% rise year-to-date.
Why Are Pork Prices Stabilizing?
Pork prices have dropped significantly in 2015 from the high of $1.38 per pound in June 2014 to the low of $0.65 per pound in March 2015.
Analysts Revised the Price Target after McDonald’s Earnings
Wall Street analysts set a price target of $125.1 for the next 12 months with a return potential of 5% from the closing price of $119.2 on January 25.
Why McDonald’s 3Q14 earnings were disappointing
In the third quarter earnings, McDonald’s reported a diluted EPS of $1.09. It declined by 28%—compared to an EPS of $1.52 in the same quarter last year.
Yum! Brands’ Earnings Margin Outperformed Its Peers’ in 3Q17
n this article, we’ll be looking at the EBIT (earnings before interest and tax) margins of the pizza companies under review in this series.
Why Investors Are Optimistic about Yum! Brands’ 4Q17 Earnings
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.
This Likely Drove Domino’s 3Q17 EPS
For 3Q17, Domino’s Pizza (DPZ) posted adjusted EPS (earnings per share) of $1.27, which represents a 32.3% YoY (year-over-year) rise from $0.96 in 3Q16.
What Can Investors Expect from Papa John’s EBITDA Margins?
Analysts expect Papa John’s (PZZA) to post EBITDA of $49.1 million in 1Q16. This represents an EBITDA margin of 11.1%—compared to 11% in 1Q15.
Why low inflation reflects weak sales but is a long-term positive
CPI growth running below 2.0% The most widely reported inflation rate is the CPI (Consumer Price Index). Since May 2012, US consumer inflation (measured by the year-over-year change in the consumer price index) has generally stayed below 2.0%. In August 2013, the overall inflation rate stood at 1.5% compared to the same month last year, […]
What to Expect from the Upcoming Domino’s Earnings
Domino’s Pizza (DPZ) is expected to release its first quarter 2015 earnings on April 23. Year-to-date, the stock is up 5%.
Why Yum! Brands has specific initiatives for its divisions
For the Pizza Hut division, management is focused on driving digital initiatives. According the company, digital initiatives were over 40%. This was an increase of over 5% from 2Q14.
Why poor comps affected McDonald’s revenues
With disappointing same-store sales performance across all four segments, it isn’t surprising that McDonald’s reported revenues of $6,987 million—a 4.5% decline.
Bloomin’ Brands loses to its peers in year-to-date returns
As of September 20, 2014, year-to-date (or YTD) returns for Bloomin’ Brands (BLMN) was -30.7%.
BYND Leads Alt-Meat Market, Faces New Competitors
On Friday, investment bank UBS started coverage on Beyond Meat Stock (BYND). At 10:08 AM ET today, the stock was trading 4.4% lower at $76.5.
McDonald’s Set To Report Latest Earnings
McDonald’s had the largest share of the fast food restaurant industry in 2014 and serves 70 million customers per day—more than the population of France.
Retail Sales Reports From ICSC-Goldman And Johnson Redbook
The ICSC-Goldman and Johnson Redbook indices both report consumer spending data each week, but people consider the ICSC-Goldman index to be more consistent.
Why Chipotle Mexican Grill had strong earnings in 3Q14
Chipotle Mexican Grill’s (CMG) third quarter earnings were released on October 21, 2014. It reported an adjusted EPS of $4.15. It increased by 56%.
Must Know: Analysts’ Price Target for Chipotle Mexican Grill
About 47% of analysts have “buy” recommendations on Chipotle, 50% of analysts have “hold” recommendations, and 3% have “sell” recommendations on the company. Overall, the stock has a “buy” rating.
Why Yum! Brands’ division in China is important
Yum! Brands’ (YUM) division in China includes its business in mainland China. It’s the combined revenues from all the brands—KFC, Pizza Hut, East Dawning, and the Little Sheep.
Shake Shack Management’s Guidance for 2015: Key Takeaways
During the latest earnings call, Shake Shack’s (SHAK) management offered revenue guidance in the range of $159 million to $163 million in 2015.
Chipotle Delivers: It Brings Back Carnitas
On September 28, Chipotle’s management announced that it was able to resume serving carnitas in 90% of Chipotle’s restaurants.
Must-know: Yum! Brands’ Taco Bell business
Taco Bell opened in 1962. It’s a fast food or quick service restaurant. About 15% of Yum! Brands’ (YUM) total restaurant units were in the Taco Bell division at the end of 2013.
Food Inflation On Meat Eases In November
Food inflation Food cost is one of the important operating costs for a restaurant. In the McDonald’s (MCD) overview series, we learned that food and paper costs can be as much as 34% of sales. Food inflation can cause a restaurant’s operating margins to squeeze, but a restaurant like Chipotle Mexican Grill (CMG) can adjust its […]
Is Starbucks’s Enterprise Multiple Trading High?
Starbucks’s current EV (enterprise value) to EBITDA multiple stands at 17x, which is close to the company’s historical high point of 17.6x and similar to its PE.
Analyzing Burger King’s shifting business model focus in 2Q14
Franchise revenues include royalties and franchise fees. Royalties are calculated as a percentage of franchise restaurant revenues, which are driven by same-store sales.
McDonald’s Risks, Strengths, and Weaknesses
The restaurant industry is susceptible to a wide array of risks of macro and micro factors. As a huge global brand, McDonald’s faces several risks.
Starbucks Year-To-Date Returns Soar to 7.5%
The Starbucks year-to-date return was 7.5% compared to an average return of 4.9% among its rivals.
Starbucks’ strategy: Aggressive unit growth
Unit growth is a key driver that Starbucks is aggressively pursuing to grow the company’s sales. In the last 12 months, Starbucks has added 1,599 net new restaurants, or 8% growth in units.
Must-know: McDonald’s pricing and marketing initiatives in 3Q14
During the third quarter, McDonald’s launched its “Our food. Your questions” campaign. It enables communication between McDonald’s and its customers.
Why Yum! Brands wants to grow outside the US
Restaurant companies in the U.S. are facing flat sales. Markets in China and India have experienced double digit growth over the past five years.
Why Tim Hortons introduced a mobile app and loyalty cards
Along with introducing new products like those we discussed in the previous part of this series, Tim Hortons (THI) is also testing different revenue channels and payment methods.
Must-know: Investors’ reactions to Wendy’s earnings
Share volume was ~14.4 million shares, compared to the 50-day average daily volume of ~4.7 million, according to NASDAQ. Wendy’s closed 2.2%, up at $8.16. Wall Street analyst consensus estimated an adjusted earnings per share (or EPS) of $0.09.
Pizza Companies: Why Stock Prices Are Struggling
Since the beginning of 2017, Papa John’s, Domino’s Pizza, and Yum! Brands have returned -16.2%, 15.1%, and 20.7%, respectively.
Domino’s Stock Falls on Longbow’s Target Price Reduction
At the end of November 28, 2017, Domino’s Pizza (DPZ) was trading at $172.29, a fall of 1.3% from the previous day’s closing price.
Why Domino’s cost of sales increased in 3Q14
The company did not pass these costs on to customers by hiking menu prices in the third quarter. Management did note, however, that some of its franchises “raised prices.”
Restaurant industry capital expenditure trends
The six-month outlook for capital expenditures as of August 2014 was 100.7, and has been above the 100 level for the past twelve months. If this is true, the restaurant industry is on an uptrend.
Chipotle’s 1Q15 Earnings Per Share Up 47%
Chipotle reported its 1Q15 EPS of $3.88, which increased an impressive 47%, compared with an EPS of $2.64 in the corresponding quarter in 2014.
Analyzing Shake Shack’s Fine-Casual Concept
Shake Shack is conceptualized as a “new fine-casual” restaurant format. The fine-casual restaurant is a hybrid of the fine dining and fast-casual dining formats.
Why McDonald’s took a big hit in China
China is part of the APMEA region. Same-store sales were down 22.7%. Approximately 5,000 restaurants were affected when McDonald’s suspended its meat supplier.
Must-know: Yum! Brands’ segments by business models
For six months ending June 2014, China’s division reported revenue of $3 billion, or 52% of Yum! revenues. China only represents 15% of the more than 40,000 Yum! restaurant units.
A critical overview of Yum! Brands for investors
Yum! Brands has the second largest market share of 11% in the U.S. fast food industry—after McDonald’s with 17% of the market share.
Consumer Sector: Post-Earnings Coverage for July 31–August 4
The Kraft Heinz Company (KHC) reported its fiscal 2Q17 results on August 3, 2017, after the market closed. Its net sales were $6.7 billion.
Why Yum! Brands’ division in India has been successful
Yum! Brands’ (YUM) division in India includes its businesses in India, Nepal, Bangladesh, and Sri Lanka. As of June 2014, the company had 714 restaurant units in India.
Restaurant Operators’ Capital Expenditure Outlook Increased
As of December 2014, the six-month outlook for capital expenditure plans was 102.4. It has been above 100 levels for the past 12 months.
Must-know: Yum! Brands’ Pizza Hut business
The first Pizza Hut opened in 1958. About one-third of Yum! Brands’ (YUM) total restaurant units in this segment were Pizza Hut at the end of 2013.
McDonald’s Global Presence and the Three-Legged Stool
McDonald’s, the world’s largest fast food chain, has over 38,000 restaurants across 120 countries. In 2018, it had approximately $21.0 billion in sales.
Must-know: Chipotle’s year-to-date performance
As of October 21, 2014, Chipotle Mexican Grill’s (CMG) year-to-date (or YTD) returns were~16.3%—compared to an average return of 8.3% on the S&P 500 Index.
The Word on the Street: What Analysts Are Recommending for Fast-Food and Pizza Companies after 1Q16
JACK, PZZA, and QSR are the most favored stocks in our group of eight fast-food restaurants, with no analyst recommending a “sell” for their stocks.
Domino’s management guidance on food costs, capex, and more
Management anticipates the effective tax rate to be in the range of 37% to 38% for the “foreseeable future.” Corporate tax rates in the U.S. are high, and force some companies to move their headquarters to countries offering lower tax rates.
Why Starbucks’ channel development produces higher margins
Channel development contributed 9.5% of the revenues for the fourth quarter of 2014. This is a good strategy to diversify the more volatile restaurant business.
Downward trend: McDonald’s November Same-Store Sales
McDonald’s November same-store sales indicate a continued slide in all segments. Tensions between Russia and Ukraine are partially to blame.
Why Burger King shares traded sideways after its earnings report
Burger King (BKW) reported its earnings on August 1 before the market opened. After the market opened, shares began trading at $26.7—which was 2% up from the previous day’s closing of $26.3.
Why you should watch Yum! Brands’ stock returns over 5 years
At the end of 2013, Yum! Brands had a total debt of $2.99 billion. The debt or equity ratio is calculated as total debt over total equity.
Burger King’s 2nd quarter 2014 tax rates and profit margins
Net income is used to calculate earnings per share (net income over weighted average shares outstanding). It improves based on an improved cost metric. Let’s see how Burger King’s (BKW) net income has done over the year.
Why Burger King is improving its traffic through product innovation
Burger King (BKW) introduced premium products internationally that should complement its menu. It launched a Hashbrown Whopper in Korea, a Barbecue Bacon Whopper in the U.S., and a Mexican Whopper in Spain.
Why Chipotle has two new concept restaurants
ShopHouse serves southeast Asian cuisine. It uses the same format as Chipotle Mexican Grill (CMG). Customers will see a resemblance in the assembly line style.
Declining Fuel Prices Will Continue To Help Restaurant Stocks
There is no way to know how long we could be seeing these lower fuel prices, but restaurants should certainly benefit from the decline.
Why we could see a refreshed KFC soon
KFC’s sales in the U.S. are slowing down. KFC is testing a new concept called the KFC Eleven to tackle this issue. It’s also testing another concept for its international market called Super Chix.
Why retail food service sales are restaurant indicators
The restaurant industry is a part of the Consumer Discretionary sector. This sector does well when the economy is expanding. It doesn’t do well when the economy is contracting.
Analysts’ Recommendations: Domino’s, Papa John’s, and Yum! Brands
Of the five analysts that follow Papa John’s, 60% recommend a “buy,” 40% recommend a “hold,” and none of the analysts recommend a “sell.”
Must-Know: What Is PEG Ratio and How Is It Used?
Investors use a bunch of metrics to determine if a stock is attractive. One such metric is the PEG or the price-to-earnings-to-growth ratio.
Overview: Yum! Brands’ costs of operations
In a company-owned restaurant, Yum! Brands (YUM) keeps all the revenues. However, it also has the cost of running the restaurant. Any changes in these costs can impact operating profit margins.