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Yum China Holdings, Inc. YUMC is scheduled to report fourth-quarter 2024 results on Feb. 6, before the opening bell.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate by 13.2% and rose 17% year over year. Total revenues marginally missed the consensus mark by 0.3% but grew 5.4% from the year-ago quarter.
YUMC’s earnings surpassed expectations in each of the trailing four quarters, the average surprise being 32.5%.
Trend in YUMC’s Estimate Revision
The Zacks Consensus Estimate for adjusted earnings per share (EPS) has trended down to 30 cents from 31 cents over the past 30 days. However, the estimated figure indicates 20% growth from the prior-year period.
Yum China Price and EPS Surprise
Yum China price-eps-surprise | Yum China Quote
The consensus estimate for total revenues is pegged at $2.67 billion, indicating a 7% increase from the year-ago period.
Factors Likely to Shape Yum China’s Q4 Results
Yum China’s top line is expected to have increased year over year due to net new unit contributions driving the robust total system sales growth. This, alongside the company’s focus on value-for-money and innovative new products, effective execution of the RGM 2.0 strategy, efficient advertising and marketing efforts and breakthrough business models, is likely to have added to the uptrend. The business models include the side-by-side KCOFFEE Cafes and Pizza Hut WOW, which have shown great potential upon their launches.
Our model expects revenues from KFC (contributed 86.1% to third-quarter 2024 total revenues) and Pizza Hut (contributed 20% to third-quarter total revenues) to grow year over year by 7.8% to $2.02 billion and 5.9% to $525.4 million, respectively.
The tailwinds mentioned above are expected to have been incremental for growth in guest traffic, reflecting the resilience of the several initiatives undertaken to improve the profitability of the company.
Moreover, the bottom line of YUMC is expected to have improved year over year on the back of favorable commodity prices and savings from spending better and buying better initiatives under Project Red Eye. Although wage increases for the frontline staff and the impact of sales deleveraging are likely to have restricted the prospects to some extent, strategic initiatives undertaken to improve operational efficiency and stabilize restaurant margin are expected to have boosted Yum China’s prospects.
We expect the adjusted operating profit margin to increase 130 basis points (bps) year over year to 6%, with adjusted operating profit increasing 37.7% to $159.7 million. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) and adjusted EBITDA margin are also expected to grow year over year by 16.6% to $283.4 million and 90 bps to 10.6%.