Profits are flying higher and flowing back to shareholders.Shares of restaurant company Yum China (YUMC 7.88%), comprised mostly of Pizza Hut and KFC restaurants, jumped on Monday morning after the company reported financial results for the third quarter of 2024. Yum China stock had recently dropped about 15% from 52-week highs but it's bouncing back today, with investors enjoying a 9% gain as of 10:30 a.m. ET.Business is slow, but profits are soaringIn Q3, Yum China opened up more than 400 net new location ...

Financial Data and Key Metrics Changes - System sales grew 4% year-over-year, with same-store sales index improving to 97% of the prior year's level [6][28] - Core operating profit increased by 18%, and diluted EPS rose by 32% [7][36] - Restaurant margin improved by 50 basis points year-over-year, while core OP margin expanded by 140 basis points [11][28] Business Line Data and Key Metrics Changes - KFC system sales increased by 6% year-over-year, with same-store sales at 98% of prior year levels [31] - Pizza Hut system sales rose by 2% year-over-year, with same-store sales at 94% of prior year levels [32] - Delivery sales for the company grew 18%, accounting for around 40% of the sales mix [13] Market Data and Key Metrics Changes - The company opened 438 net new stores in Q3, totaling over 1,200 net new stores year-to-date [23] - The franchise mix for net new stores increased from 15% in 2023 to 27% year-to-date, with expectations to reach 40% to 50% in the coming years [25] Company Strategy and Development Direction - The company is focusing on operational efficiency and innovation through initiatives like Project Fresh Eye and Project Red Eye [9][10] - The RGM 2.0 strategy emphasizes both system sales and same-store sales growth [12][42] - The company is expanding its franchise model to unlock opportunities in strategic locations and lower-tier cities [24][25] Management's Comments on Operating Environment and Future Outlook - Management remains confident in China's midterm and long-term growth opportunities despite current market challenges [40] - The company expects to maintain focus on operational efficiency and innovation to drive sales and profit growth [41] - Management anticipates that the fourth quarter will be traditionally low season, with cautious consumer spending expected [40][64] Other Important Information - The company plans to return $4.5 billion to shareholders from 2024 to 2026, increasing its capital return plan by 50% [39][88] - The company has a healthy cash position with net cash of $3.1 billion as of the end of the quarter [38] Q&A Session Summary Question: Long-term focus on same-store sales vs. system sales - Management emphasized the importance of both same-store sales and system sales, with a focus on transaction growth as a key driver for the business [46][49] Question: KFC pricing strategy and competition - Management noted that KFC's pricing strategy aims for stability, with slight increases compared to previous quarters, while Pizza Hut continues to lower prices to attract mass market consumers [54][55] Question: Franchising model and CapEx spending - Management explained that the increase in franchising is due to readiness and improved franchisee quality, which may lead to lower CapEx spending in the future [58][59] Question: Fourth quarter trends and pricing stabilization - Management indicated that while there are no significant changes in consumer sentiment, they expect to maintain positive same-store transaction growth in Q4 [64][66] Question: Food safety and cost control - Management reassured that food safety is a top priority, with compliance and quality assurance processes in place [72][73] Question: KCOFFEE performance and profitability - Management reported a single-digit sales uplift from KCOFFEE cafes, with significant growth in cups sold and plans for further expansion [77][78] Question: Pizza WOW store performance and growth potential - Management acknowledged that Pizza WOW is still in the early stages, with ongoing efforts to improve operational efficiency and product availability [81][82]

Yum China Holdings (YUMC) came out with quarterly earnings of $0.77 per share, beating the Zacks Consensus Estimate of $0.68 per share. This compares to earnings of $0.59 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 13.24%. A quarter ago, it was expected that this restaurant operator in China would post earnings of $0.47 per share when it actually produced earnings of $0.55, delivering a surprise of 17.02%.Over the last fou ...

Revenue Growth and Performance - Total system sales grew 4% YoY, driven by 7% net new unit contribution[2] - Total revenues increased 5% YoY to $3.07 billion, an all-time quarter high[2] - Total revenues for the quarter ended 9/30/2024 increased by 5% to $3,071 million compared to $2,914 million in the same period last year[21] - Company sales for the quarter ended 9/30/2024 grew by 5% to $2,895 million from $2,759 million in the prior year[21] - Total revenues for Q3 2024 amounted to $3,071 million, with KFC contributing $2,311 million and Pizza Hut $615 million[50] - Total revenues for the year to date ended 9/30/2023 were $8.485 billion, with KFC contributing $6.368 billion and Pizza Hut $1.750 billion[58] - Total company sales across all segments amount to $8.048 billion, with KFC contributing $6.274 billion and Pizza Hut $1.728 billion[59] Store Expansion and Count - Total store count reached 15,861, including 11,283 KFC stores and 3,606 Pizza Hut stores, with 438 net new stores opened in Q3[2] - Pizza Hut opened 102 net new stores during the quarter, with 15 net new stores opened by franchisees, reaching a total store count of 3,606 as of September 30, 2024[9] - The company targets to open approximately 1,500 to 1,700 net new stores in the 2024 fiscal year[10] - KFC's total units increased to 11,283 as of 9/30/2024, up from 10,296 at the end of 2023, with 1,189 new builds and 202 closures[32] - Pizza Hut's total units grew to 3,606 as of 9/30/2024, compared to 3,312 at the end of 2023, with 406 new builds and 112 closures[32] - Other brands' total units decreased to 972 as of 9/30/2024 from 1,036 at the end of 2023, with 110 new builds and 174 closures[32] Delivery and Digital Sales - Delivery sales grew 18% YoY, contributing approximately 40% of KFC and Pizza Hut's Company sales[2] - Digital sales reached $2.61 billion, accounting for approximately 90% of total Company sales[2] - Delivery sales grew 11% YoY, contributing approximately 39% of Pizza Hut's Company sales for the quarter[9] Membership and Customer Engagement - Total membership of KFC and Pizza Hut exceeded 510 million, with member sales accounting for approximately 64% of system sales[2] Operating Profit and Margins - Operating profit grew 15% YoY to $371 million, with core operating profit increasing 18% YoY[2] - Operating profit for the quarter ended 9/30/2024 rose by 15% to $371 million compared to $323 million in the same period last year[21] - Operating profit for Q3 2024 was $371 million, with KFC leading at $364 million and Pizza Hut at $52 million[50][51] - Core operating profit for Q3 2024 was $369 million, adjusted for special items and FX impact[51] - Core operating profit for the quarter ended 9/30/2024 was $369 million, an 18% increase from $312 million in the prior year period[43] - The company's core operating profit margin improved to 12.1% in the quarter ended 9/30/2024, up 1.4 percentage points from 10.7% in the prior year period[43] - Adjusted operating profit, excluding special items, is $1.005 billion, with KFC at $1.035 billion and Pizza Hut at $137 million[60] - Core operating profit, after adjusting for items affecting comparability, is $951 million, with KFC at $991 million and Pizza Hut at $129 million[60] Earnings and Shareholder Returns - Diluted EPS increased 33% YoY to $0.77[2] - The company plans to step up capital returns to shareholders by 50% to $4.5 billion for 2024-2026[1] - The company aims to return a record-setting $1.5 billion to shareholders through quarterly cash dividends and share repurchases in 2024[10] - Net income for Yum China Holdings, Inc. for the quarter ended 9/30/2024 increased by 22% to $297 million from $244 million in the prior year[21] - Basic earnings per common share for the quarter ended 9/30/2024 were $0.77, up from $0.59 in the same period last year[21] - Diluted earnings per common share for the quarter ended 9/30/2024 were $0.77, compared to $0.58 in the prior year[21] - Net income for the quarter ended 9/30/2024 was $297 million, compared to $244 million in the same period last year, representing a 21.7% increase[39][40] - Adjusted EBITDA for the quarter ended 9/30/2024 was $501 million, up 13.6% from $441 million in the prior year period[40] - Basic earnings per share for the quarter ended 9/30/2024 was $0.77, up from $0.59 in the same period last year[39] - The company's adjusted diluted earnings per share for the quarter ended 9/30/2024 was $0.77, compared to $0.59 in the prior year period[39] - Repurchase of shares of common stock amounted to $1,057 million for the year to 9/30/2024, significantly higher than the $280 million in the previous year[29] - Cash dividends paid on common stock increased to $187 million for the year to 9/30/2024 from $162 million in the same period last year[29] Costs and Expenses - Food and paper costs as a percentage of company sales increased by 0.6 percentage points to 31.7% for the quarter ended 9/30/2024[21] - Payroll and employee benefits as a percentage of company sales decreased by 0.2 percentage points to 25.1% for the quarter ended 9/30/2024[21] - Occupancy and other operating expenses as a percentage of company sales decreased by 0.4 percentage points to 26.2% for the quarter ended 9/30/2024[21] - KFC's food and paper costs increased by 7% to $713 million in Q3 2024 compared to $666 million in Q3 2023[22] - Pizza Hut's food and paper costs rose by 7% to $202 million in Q3 2024 compared to $187 million in Q3 2023[23] - Total costs and expenses for Q3 2024 were $2,700 million, with company restaurant expenses being the largest component at $2,401 million[50] - The company's central procurement model involves revenues and expenses from transactions with franchisees, totaling $282 million in revenues and $270 million in expenses[59][62] Segment Performance (KFC and Pizza Hut) - System sales for Pizza Hut grew 2% YoY in the quarter, primarily driven by net new unit contribution of 7%[8] - Same-store sales reached 94% of the prior year's level, improved from 92% in the second quarter[8] - Operating profit grew 13% YoY to $52 million, with core operating profit increasing 20% YoY[9] - OP margin was 8.6%, an increase of 80 basis points YoY[9] - Restaurant margin was 12.8% for the quarter, up 60 basis points YoY excluding items affecting comparability[9] - KFC's total revenues increased by 6% to $2.311 billion in Q3 2024 compared to $2.186 billion in Q3 2023[22] - KFC's operating profit margin improved by 0.1 percentage points to 15.7% in Q3 2024[22] - Pizza Hut's total revenues grew by 2% to $615 million in Q3 2024 compared to $599 million in Q3 2023[23] - Pizza Hut's operating profit margin increased by 0.8 percentage points to 8.6% in Q3 2024[23] - KFC's company sales rose by 6% to $2.276 billion in Q3 2024 compared to $2.154 billion in Q3 2023[22] - Pizza Hut's company sales increased by 2% to $606 million in Q3 2024 compared to $591 million in Q3 2023[23] - KFC's franchise fees and income grew by 15% to $19 million in Q3 2024 compared to $16 million in Q3 2023[22] - Pizza Hut's franchise fees and income increased by 8% to $2 million in Q3 2024 compared to $2 million in Q3 2023[23] - KFC company sales for Q3 2024 reached $2,276 million, contributing significantly to the total company sales of $2,895 million[50] - Pizza Hut company sales for Q3 2024 were $606 million, showing a steady performance[50] - Restaurant margin for KFC in Q3 2024 was 18.3%, while Pizza Hut had a margin of 12.7%[50][53] - KFC's GAAP operating profit for the quarter ended 9/30/2023 was $342 million, while Pizza Hut's was $47 million[54] - Total company sales for the year to date ended 9/30/2024 were $8.217 billion, with KFC contributing $6.452 billion and Pizza Hut $1.723 billion[55] - KFC's restaurant margin percentage for the year to date ended 9/30/2024 was 18.0%, while Pizza Hut's was 12.8%[56] - The core operating profit for KFC, adjusted for F/X impact, was $1.027 billion for the year to date ended 9/30/2024[57] - KFC's GAAP operating profit for the year to date ended 9/30/2023 is $1.035 billion, while Pizza Hut's is $137 million[59] - Total GAAP operating profit for all segments combined is $996 million, with corporate and unallocated expenses at $(156) million[59] - KFC's restaurant margin percentage is 19.4%, significantly higher than Pizza Hut's 13.1%[59] Financial Position and Cash Flow - Cash and cash equivalents increased to $1,193 million as of 9/30/2024, up from $1,128 million at the end of 2023[26] - Net income including noncontrolling interests rose to $854 million for the year to 9/30/2024, compared to $794 million in the same period last year[29] - Total assets decreased slightly to $11,801 million as of 9/30/2024 from $12,031 million at the end of 2023[26] - Net cash provided by operating activities was $1,252 million for the year to 9/30/2024, down from $1,334 million in the previous year[29] - Capital spending for the year to 9/30/2024 was $523 million, slightly higher than the $499 million spent in the same period last year[29] Tax and Other Financial Metrics - The company's effective tax rate for the quarter ended 9/30/2024 was 27.3%, slightly lower than 27.5% in the prior year period[39] - Store impairment charges for the quarter ended 9/30/2024 were $10 million, compared to $3 million in the same period last year[40] - Temporary relief from landlords and government agencies reduced operating profit by $10 million and $4 million respectively[60] - VAT deductions had a significant impact, reducing operating profit by $42 million, with KFC accounting for $34 million of that reduction[60] Franchise Performance - Franchise fees and income for Q3 2024 totaled $25 million, with KFC contributing $19 million[50] - Revenues from transactions with franchisees in Q3 2024 were $116 million, with KFC contributing $15 million and Pizza Hut $19 million[50] - Other revenues for Q3 2024 were $35 million, with significant contributions from other segments at $176 million[50]

Yum China Holdings, Inc. YUMC — the parent company of KFC, Pizza Hut, and Taco Bell — will release earnings results for its third quarter, before the opening bell on Monday, Nov. 4.Analysts expect the China-based company to report quarterly earnings at 67 cents per share, up from 59 cents per share in the year-ago period. Yum China projects to report revenue of $3.05 billion for the recent quarter, compared to $2.91 billion a year earlier, according to data from Benzinga Pro.On Aug. 5, Yum China reported se ...

Yum China Holdings, Inc. (YUMC) is scheduled to report third-quarter 2024 results on Nov. 4, before the opening bell.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate and rose 17% year over year. Total revenues missed the consensus estimate by 3.3% but inched up 1% from the year-ago quarter.YUMC’s earnings surpassed expectations in three of the trailing four quarters and missed on the rem ...

Yum China (NYSE: YUMC ) is the leading restaurant company in China. Western-styled fast food was a fairly new concept for Chinese consumers when Yum opened the first KFC in Beijing in 1987, but it met with instant success asPhilipp is a seasoned value investor with nearly 20 years of experience in the field. He takes a global approach to investment opportunities, seeking out undervalued companies that offer a significant margin of safety, leading to attractive dividend yields and returns. While he does not ...

The upcoming report from Yum China Holdings (YUMC) is expected to reveal quarterly earnings of $0.68 per share, indicating an increase of 15.3% compared to the year-ago period. Analysts forecast revenues of $3.08 billion, representing an increase of 5.7% year over year.The current level reflects a downward revision of 3.3% in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their initial projections over thi ...

Yum China Holdings, Inc. (NYSE: YUMC ) operates and franchises the KFC, Pizza Hut, Taco Bell, Lavazza, Little Sheep, and Huang Ji Huang restaurant chains in China, with many of the brands being operated by Yum! Brands, Inc. (I am an avid investor with a major focus on small cap companies with experience in investing in US, Canadian, and European markets. My investment philosophy to generating great returns on the stock market revolves around identifying mispriced securities by understanding the drivers behi ...

If you are looking for a stock that has a solid history of beating earnings estimates and is in a good position to maintain the trend in its next quarterly report, you should consider Yum China Holdings (YUMC) . This company, which is in the Zacks Retail - Restaurants industry, shows potential for another earnings beat.When looking at the last two reports, this restaurant operator in China has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 12.30%, on average, ...