Q2 Preview: China, Taco Bell Two Key Issues for Yum! (YUM) into Results
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Price: $152.99 +0.43%
Financial Fact:
Franchise and license expenses: 50M
Today's EPS Names:
BTTX, VAXX, ELYS, More
Financial Fact:
Franchise and license expenses: 50M
Today's EPS Names:
BTTX, VAXX, ELYS, More
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Yum! Brands, Inc. (NYSE: YUM) shares are looking delicious ahead of its second-quarter earnings release, expected out after the market closes Wednesday.
The last two earnings releases, Yum! shares jumped following results, setting the stock up for a potential pop should results come in-line or better than expectations.
Conversely, the stock is nearing an all-time high of $57.04, meaning potential upside could be limited this time around.
Yum! is expected to report earnings of 61 cents per share on revenue of $2.70 billion. If the company can hit the Wall Street consensus, earnings would represent a drop of 3.2 percent sequentially, and a gain of 5.2 percent from the same period last year.
Shares gained 8.1 percent through the quarter and are up 2.1 percent since.
Analysts seem neutral-to-bullish on Yum!; data from Bloomberg has 10 analysts with a Buy rating, 11 at Hold, and one suggesting to Sell. The analyst price target average is $57.40, with a low of $50 and high of $62. Shares have traded in a range of $39.42 to $57.04 over the last 52-weeks.
Analyst Commentary
Earlier in July, Goldman Sachs downgraded shares to Sell, citing China uncertainty and weakness with Taco Bell. Goldman sees earnings of 61 cents per share, right in-line with the consensus. As Yum!'s China comps are tied closely to GDP, Goldman notes "given China’s current monetary tightening cycle and historical correlations, we believe YUM’s China SSS may decelerate in the back half of the year." Further, a survey conducted by Goldman shows American's believe the fallout from Taco Bell's beef lawsuit continues to linger.
Deutsche Bank has a Hold rating and sees its model as conservative "on China comps given the broad-based strength seen in 1Q11." The firm sees comps down about 1.3 percent in the U.S., with tougher comps at Taco Bell following the beef lawsuit. China comps expected to increase about 9 percent in the quarter, but "even with very strong comps, we are expecting high food and labor inflation to continue to weigh on China margins." YRI comps should also accelerate 2 percent, though recent markets like Australia and the U.K. might cause a problem.
Deutsche sees earnings of 60 cents per share in the quarter.
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release.
The last two earnings releases, Yum! shares jumped following results, setting the stock up for a potential pop should results come in-line or better than expectations.
Conversely, the stock is nearing an all-time high of $57.04, meaning potential upside could be limited this time around.
Yum! is expected to report earnings of 61 cents per share on revenue of $2.70 billion. If the company can hit the Wall Street consensus, earnings would represent a drop of 3.2 percent sequentially, and a gain of 5.2 percent from the same period last year.
Shares gained 8.1 percent through the quarter and are up 2.1 percent since.
Analysts seem neutral-to-bullish on Yum!; data from Bloomberg has 10 analysts with a Buy rating, 11 at Hold, and one suggesting to Sell. The analyst price target average is $57.40, with a low of $50 and high of $62. Shares have traded in a range of $39.42 to $57.04 over the last 52-weeks.
Analyst Commentary
Earlier in July, Goldman Sachs downgraded shares to Sell, citing China uncertainty and weakness with Taco Bell. Goldman sees earnings of 61 cents per share, right in-line with the consensus. As Yum!'s China comps are tied closely to GDP, Goldman notes "given China’s current monetary tightening cycle and historical correlations, we believe YUM’s China SSS may decelerate in the back half of the year." Further, a survey conducted by Goldman shows American's believe the fallout from Taco Bell's beef lawsuit continues to linger.
Deutsche Bank has a Hold rating and sees its model as conservative "on China comps given the broad-based strength seen in 1Q11." The firm sees comps down about 1.3 percent in the U.S., with tougher comps at Taco Bell following the beef lawsuit. China comps expected to increase about 9 percent in the quarter, but "even with very strong comps, we are expecting high food and labor inflation to continue to weigh on China margins." YRI comps should also accelerate 2 percent, though recent markets like Australia and the U.K. might cause a problem.
Deutsche sees earnings of 60 cents per share in the quarter.
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release.
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