Yum! Brands, Inc. Just Missed EPS By 12%: Here's What Analysts Think Will Happen Next

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%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Yum! Brands after the latest results.

Check out our latest analysis for Yum! Brands

After the latest results, the 24 analysts covering Yum! Brands are now predicting revenues of US$7.70b in 2024. If met, this would reflect a decent 9.6% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be US$5.65, roughly flat on 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 small dip in their earnings per share numbers for next year.

The consensus price target held steady at US$145, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Yum! Brands, with the most bullish analyst valuing it at US$161 and the most bearish at US$127 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. 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. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.7% annually. 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. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Yum! Brands going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Yum! Brands (2 are a bit concerning!) that 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.