Yum Brands Inc

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, […]

According to the NRA, the restaurant operators will become “more cautious” towards business conditions over the next six months.

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.

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 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.

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.

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.

Initial jobless claims can help us gauge the health of the US labor market. It indicates the number of people filing for unemployment.

On July 23, Papa John’s (PZZA) hit a 52-week low of $46.06 before closing the day at $46.56.

Over the past four quarters, Starbucks’s same-store sales growth has increased due to growth in ticket and traffic.

Davidson Kempner Capital Management initiated a new position in CBS Corporation (CBS) that accounted for 1.55% of the fund’s 3Q14 portfolio.

The Expected Business Conditions Index is part of the Expectations Index. It measures restaurant operators’ outlook towards business conditions over the next six months.

In 1Q16, PZZA’s domestic company-owned restaurants generated nearly 48% of Papa John’s revenue, while domestic commissaries and others generated 39.4%.

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.

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.

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 Pizza (DPZ) posted 1Q16 revenues of $539.2 million and adjusted EPS of $0.89.

Bloomin’ Brands (BLMN) refreshed Carrabba’s menu in the first half of 2014 with a price point and variety in mind.

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.

Management stated that it expects the second quarter EPS to lag by 20% YoY. It expects full-year EPS growth of 10% in 2015.

For the next four quarters, analysts expect Papa John’s (PZZA) to post revenue of $1.83 billion, which represents growth of 5.5%.

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.

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.

In this part, we’ll look at how the company’s valuation PE (price-to-earnings multiple) affects Panera’s stock price.

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 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.

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 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.

The expected capital expenditure index increased by 0.9% to 100.8 in May from 101.7 in April.

Wall Street analysts’ estimated EBITDA for the fourth quarter is $633 million—compared to $918 million in the same quarter last year.

On April 22, 2016, McDonald’s (MCD), which forms 1.3% of the Vanguard Growth ETF (VUG), was trading at $125.5.

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 […]

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.

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.

Following its dismal performance in 3Q15, Yum! decided to release its same-store sales growth performance for China on a monthly basis.

In 3Q17, Comcast’s Business Services segment generated revenues of $1.6 billion, which rose 12.6% year-over-year.

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) […]

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.

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.

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.

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.

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.

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.

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.

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.

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.

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, […]

Domino’s Pizza (DPZ) is expected to release its first quarter 2015 earnings on April 23. Year-to-date, the stock is up 5%.

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.

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.

As of September 20, 2014, year-to-date (or YTD) returns for Bloomin’ Brands (BLMN) was -30.7%.

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 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.

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.

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%.

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.

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.

During the latest earnings call, Shake Shack’s (SHAK) management offered revenue guidance in the range of $159 million to $163 million in 2015.

On September 28, Chipotle’s management announced that it was able to resume serving carnitas in 90% of Chipotle’s restaurants.

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 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 […]

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.

Franchise revenues include royalties and franchise fees. Royalties are calculated as a percentage of franchise restaurant revenues, which are driven by same-store sales.

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.

The Starbucks year-to-date return was 7.5% compared to an average return of 4.9% among its rivals.

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.

During the third quarter, McDonald’s launched its “Our food. Your questions” campaign. It enables communication between McDonald’s and its customers.

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.

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.

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.

Since the beginning of 2017, Papa John’s, Domino’s Pizza, and Yum! Brands have returned -16.2%, 15.1%, and 20.7%, respectively.

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.

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.”

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 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.

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.

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.

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.

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.

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.

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.

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.

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, 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.

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.

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.

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.

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.

McDonald’s November same-store sales indicate a continued slide in all segments. Tensions between Russia and Ukraine are partially to blame.

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.

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.

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.

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.

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.

There is no way to know how long we could be seeing these lower fuel prices, but restaurants should certainly benefit from the decline.

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.

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.

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.”

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.

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.