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Why Is Yum! Brands (YUM) Down 4.6% Since the Last Earnings Report?

It has been about a month since the last earnings report for Yum! Brands, Inc.YUM . Shares have lost about 4.6% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Yum! Brands Beats on Q4 Earnings, Revenues In Line

Yum! Brands posted fourth-quarter 2016 adjusted earnings of $0.79 per share, which surpassed with the Zacks Consensus Estimate of $0.72 by 9.7%. Further, earnings increased 19% year over year due to lower share count and higher revenues.

Meanwhile, total revenue of $2.02 billion also inched up 2.4% year over year primarily owing to higher franchise and license fees and income. Notably, revenues came almost in line with the Zacks Consensus Estimate.

Comps Discussion

From Jan 2016, the company's India business integrated its three restaurant brands into the global KFC, Pizza Hut and Taco Bell divisions. Further on Oct 31, 2016, Yum! Brands' completed the spin-off of the China business into an independent, publicly-traded company. Post-separation Yum! Brands now reports under three segments - KFC, Pizza Hut and Taco Bell.

Comps at the KFC division were up 3% same as the year-ago quarter growth, but less than the prior-quarter growth of 4%. Growth was witnessed across the U.S. as well as international developed and emerging markets.

Pizza Hut comps declined 2%, comparing unfavorably with year-ago quarter's flat comps as well as last quarter's dip of 1%. Comps remained flat in international emerging markets but declined 2% and 4% in international developed markets and the U.S., respectively.

Taco Bell comps inched up 3% same as the prior-quarter growth but less than the year-ago quarter growth of 4%.

While restaurant margins improved at KFC, it declined at the Pizza Hut and Taco Bell divisions.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

Yum! Brands, Inc. Price and Consensus

Yum! Brands, Inc. Price and Consensus | Yum! Brands, Inc. Quote

VGM Scores

At this time, Yum! Brands's stock has a poor score of 'F' on both growth and momentum front. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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