Yum! Brands, Inc. (NYSE:YUM) released earnings results for its second quarter Tuesday before the opening bell.
Analysts covering the Louisville, Kentucky-based company provided their takes:
- Goldman Sachs analyst Christine Cho maintained the Neutral rating on Yum! Brands with a price forecast of $150.
- Piper Sandler analyst Brian Mullan reiterated the Neutral rating on Yum Brands with a price forecast of $140.
- BMO Capital Markets analyst Andrew Strelzik has a Market Perform rating on Yum! Brands, with a price forecast of $135.
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Goldman Sachs: Cho revised the EBITDA forecasts for FY24, FY25, and FY26 to $2.73 billion, $2.97 billion, and $3.26 billion, respectively, down from $2.73 billion, $2.99 billion, and $3.3 billion.
This adjustment reflects slightly weaker same-store sales growth and revenue trends, which are somewhat mitigated by reduced general and administrative expenses.
Piper Sandler: Mullan writes that while the top line in the year's second half will be softer than management was forecasting at the beginning of the year, same-store sales will sequentially improve as the calendar moves from the second quarter to the third quarter and fourth quarter.
On top of that, the analyst notes that adjusted G&A dollars were down ~9 to 10% in the quarter, and management shared that it expects this line to be down on an FY2024 basis.
As the quarter concludes, analysts anticipate minimal changes to consensus-adjusted EPS estimates for 2024 through 2026. Any potential reductions in sales are expected to be roughly balanced by lower G&A expenses.
Mullan raised the FY25 revenue estimate to $8.078 billion from $7.952 billion.
BMO Capital Markets: Yum Brands owns three major quick-service chains: Taco Bell, Pizza Hut and KFC.
The company appears well-positioned to execute against its long-term growth algorithm over time, and its portfolio should be well-suited for a softer consumer spending environment.
The company continues to leverage G&A expenses to bolster its operating profit outlook.
While optimistic about long-term fundamentals, the analyst currently prefers global fast-food peers such as Domino's Pizza Inc (NYSE:DPZ), McDonald's Corporation (NYSE:MCD), and Restaurant Brands International Inc. (NYSE:QSR).
Strelzik expects the company to report FY24 revenues of $7.600 billion, and FY25 revenues of $8.093 billion.
Price Action: YUM shares are trading lower by 0.38% to $136.33 at last check Wednesday.
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