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Likely Coronavirus Impact on YUM! Brands (YUM) Q1 Earnings

Zacks Equity Research

YUM! Brands, Inc. YUM is scheduled to report first-quarter 2020 results on Apr 29, before the opening bell. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 9.9%.

Q1 Estimates

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share declined to 64 cents from 71 cents in the past 30 days. This indicates a decline of 22% from 82 cents per share reported in the year-ago quarter.

Revenues are anticipated at $1.20 billion, suggesting a decline of 4.3% from $1.25 billion reported in the year-ago quarter.

Factors to Note

YUM! Brands top and bottom line in the quarter is likely to reflect the impact of the coronavirus pandemic. Moreover, the company’s same store sales and traffic are likely to have witnessed a sharp decline in the quarter to be reported. The company’s all three segments — KFC, Pizza Hut and Taco Bell — are likely to witness year-over-year decline in revenues.

The Zacks Consensus Estimate for revenues for KFC, Pizza Hut and Taco Bell segments is pegged at $538 million, $225 million and $428 million, representing year-over-year decline of 4.9%, 7.4% and 3.8%, respectively.

However, YUM! Brands has been focusing on transforming its Pizza Hut business to a modern delivery asset base in the United States. It has also been restructuring and upgrading its franchisee base. This is likely to have contributed to the Pizza Hut U.S. sales in the first quarter.

Yum! Brands, Inc. Price and EPS Surprise

Yum! Brands, Inc. Price and EPS Surprise

Yum! Brands, Inc. price-eps-surprise | Yum! Brands, Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for YUM! Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here. 

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

YUM! Brands has a Zacks Rank #4 (Sell) and an Earnings ESP of -1.85%.

Stocks Poised to Beat Earnings Estimates

Here are some stocks from the Zacks Retail-Wholesale sector that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:

Papa John's International, Inc. PZZA has a Zacks Rank #3 and an Earnings ESP of +15.44%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Potbelly Corporation PBPB has a Zacks Rank #3 and an Earnings ESP of +16.18%.

Builders FirstSource, Inc. BLDR has a Zacks Rank #3 and an Earnings ESP of +9.16%.

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