Yum! Brands, Inc. Just Missed Earnings - But Analysts Have Updated Their Models

It's shaping up to be a tough period for Yum! Brands, Inc. (NYSE:YUM), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. Yum! Brands missed earnings this time around, with US$1.6b revenue coming in 6.6% below what the analysts had modelled. Statutory earnings per share (EPS) of US$1.10 also fell short of expectations by 12%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Yum! Brands

After the latest results, the 24 analysts covering Yum! Brands are now predicting revenues of US$7.71b in 2024. If met, this would reflect a solid 9.6% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be US$5.65, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$7.78b and earnings per share (EPS) of US$5.81 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$145, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Yum! Brands analyst has a price target of US$161 per share, while the most pessimistic values it at US$127. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Yum! Brands' growth to accelerate, with the forecast 13% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Yum! Brands to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Yum! Brands. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$145, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Yum! Brands analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Yum! Brands (2 are concerning) you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.