Core Insights - Yum Brands reported revenue of $1.93 billion for the quarter ended June 2025, reflecting a year-over-year increase of 9.6% and a slight revenue surprise of +0.15% over the Zacks Consensus Estimate [1] - The earnings per share (EPS) for the quarter was $1.44, which is an increase from $1.35 in the same quarter last year, but fell short of the consensus EPS estimate of $1.45, resulting in an EPS surprise of -0.69% [1] Financial Performance Metrics - System same-store sales for the Pizza Hut Division decreased by 1% compared to an average estimate of -1.8% [4] - KFC Division's same-store sales increased by 2%, slightly below the average estimate of 2.3% [4] - Taco Bell Division's same-store sales rose by 4%, which is lower than the estimated 5.2% [4] - Total number of restaurants was reported at 61,272, which is below the estimated 61,524 [4] - Company sales revenue was $669 million, compared to the estimated $680.67 million, marking a 17% increase year-over-year [4] - Franchise and property revenues reached $835 million, exceeding the estimate of $826.92 million, with a year-over-year increase of 5.8% [4] - Franchise contributions for advertising and other services totaled $428 million, slightly above the estimate of $426.07 million, representing a 6.5% year-over-year increase [4] - KFC Division's franchise contributions for advertising and other services were $167 million, surpassing the estimate of $159.68 million, with a year-over-year increase of 12.1% [4] - Habit Burger Grill Division reported revenues of $134 million, below the estimate of $142.99 million, reflecting a 5% decrease year-over-year [4] - Pizza Hut Division's franchise contributions for advertising and other services were $85 million, below the estimate of $90.52 million, indicating a 4.5% year-over-year decline [4] - Taco Bell Division's franchise contributions for advertising and other services were $176 million, slightly above the estimate of $174.54 million, with a year-over-year increase of 7.3% [4] - Habit Burger Grill Division's company sales were $130 million, below the estimate of $141.27 million [4] Stock Performance - Yum Brands' shares have returned -2.2% over the past month, contrasting with the Zacks S&P 500 composite's +1% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance against the broader market in the near term [3]

Core Insights - Yum! Brands Inc reported second-quarter earnings of $1.44 per share, slightly below the Zacks Consensus Estimate of $1.45, and revenue of $1.93 billion, just under the expected $1.94 billion [1] - The company's underperformance was attributed to weak domestic results from KFC and Pizza Hut, which are facing significant competition [1] Stock Performance - Following the earnings report, Yum! Brands' stock declined by 3.1%, trading at $142.42, although it still maintains a 6.26% year-to-date gain [2] - Support at the $140 level has helped stabilize the stock since February [2] Analyst Sentiment - Analysts show caution towards Yum! Brands, with nine maintaining a "strong buy" rating and 18 a "hold" rating [3] - Options traders have exhibited increased bullish sentiment, with a call/put volume ratio of 1.85, higher than 96% of readings from the past year [3] Options Activity - Options volume is currently five times the typical intraday average, with the most active contract being the monthly 8/15 140-strike call [4]

Financial Data and Key Metrics Changes - System sales grew by 4%, driven by strong unit growth at KFC International and market share gains at Taco Bell U.S. [6][30] - Digital sales increased by 18%, with a digital mix reaching a record 57%, up two points from the previous quarter [30][8] - Total restaurant level margins were 16.3%, down approximately 150 basis points year over year due to unfavorable commodity impacts [31][32] - Core operating profit increased by 2% to $646 million, with ex-special EPS at $1.44, up 7% year over year [32][33] Business Line Data and Key Metrics Changes - KFC contributed 52% of Yum! Brands' divisional operating profit, with same-store sales growth of 3% in key international markets [10][11] - Taco Bell accounted for 37% of divisional operating profit, achieving 4% same-store sales growth, outpacing the limited service category in the U.S. by four percentage points [13][14] - Pizza Hut represented 11% of divisional operating profit, with same-store sales growth of 2% internationally, driven by recovery in the Middle East and strong performance in South Asia [15][17] Market Data and Key Metrics Changes - KFC International's same-store sales growth was driven by strong performance in South Africa, Spain, Canada, Japan, and the UK [10] - Taco Bell's same-store sales grew 5% in Europe, with double-digit increases in Canada and India [15] - Habit Burger and Grill experienced a year-over-year system sales decline of 1%, reflecting continued softness in consumer demand [17] Company Strategy and Development Direction - The company aims to be the most loved and trusted brand globally, focusing on digital sales and AI-driven personalized marketing [8][23] - KFC U.S. is implementing the Kentucky Fried Comeback campaign to improve performance in underperforming regions [11] - Taco Bell is expanding its beverage offerings with the Live Mas Cafe, targeting a $5 billion beverage market in the U.S. [19][76] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a tough consumer environment but noted Taco Bell's strong performance across all income bands [80][81] - The company expects to achieve 8% core operating profit growth for the year, with a focus on optimizing company store profits and managing G&A expenses [56][60] - Management remains optimistic about the future, citing strong digital capabilities and ongoing development momentum [45][48] Other Important Information - The company has made significant strides in sustainability, achieving 89% of suppliers certified for food safety initiatives and sourcing 94% cage-free eggs [24][25] - The transition of CEO from David Gibbs to Chris Turner is set to occur on October 1, with Gibbs remaining as an advisor until 2026 [6][28] Q&A Session Summary Question: Guidance for the year and confidence in achieving 8% operating profit growth - Management remains on track to deliver 8% core operating profit growth, with solid performance expected in the second half [54][56] Question: Technology capabilities and their impact on metrics - The BITE strategy is positively impacting both top and bottom lines, with AI-enabled marketing showing strong returns [61][63] Question: Capital intensity and future unit development - The company will continue to be asset-light, focusing on high-performing restaurants and ensuring strong returns on investments [70][73] Question: Beverage strategy and differentiation - Taco Bell is well-positioned in the beverage market, with plans to expand the Live Mas Cafe and leverage proprietary beverages [76][77] Question: Consumer environment and brand positioning - Taco Bell is gaining market share even in a pressured consumer environment, with consistent sales growth across income bands [81][82]

Financial Data and Key Metrics Changes - System sales grew by 4%, driven by strong unit growth at KFC International and market share gains at Taco Bell U.S. [5][30] - Digital sales increased by 18%, with a digital mix reaching a record 57%, up two points from the previous quarter [30][6] - Core operating profit increased by 2% to $646 million, with adjusted EPS at $1.44, up 7% year over year [32][33] Business Line Data and Key Metrics Changes - KFC contributed 52% of Yum! Brands' divisional operating profit, with KFC International growing same-store sales by 3% [8][12] - Taco Bell accounted for 37% of divisional operating profit, achieving 4% same-store sales growth, outpacing the limited service category in the U.S. by four percentage points [12][13] - Pizza Hut represented 11% of divisional operating profit, with same-store sales growth of 2% internationally, driven by recovery in the Middle East and strong performance in South Asia [15][14] Market Data and Key Metrics Changes - KFC International saw strong performance in key markets including South Africa, Spain, Canada, Japan, and the UK [8][10] - Taco Bell's same-store sales grew 5% in Europe, with double-digit increases in Canada and India [14] - Habit Burger and Grill experienced a year-over-year system sales decline of 1%, reflecting continued softness in consumer demand [15] Company Strategy and Development Direction - The company aims to be the most loved and trusted brand globally, focusing on digital sales and AI-driven personalized advertising [6][7] - KFC U.S. introduced the "Kentucky Fried Comeback" campaign to improve performance in underperforming regions [10] - Taco Bell is expanding its beverage offerings with the Live Mas Cafe, targeting the $25 billion beverage category in the U.S. [18][76] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a tough consumer environment but noted Taco Bell's ability to gain market share across all income bands [80][81] - The company expects to achieve 8% core operating profit growth for the year, with a strong focus on optimizing company store profits and refranchising gains [53][56] - Management expressed confidence in the long-term growth potential, emphasizing the strength of their digital capabilities and operational scale [45][48] Other Important Information - The company opened 871 gross new units in the quarter, translating to 386 net new units [33][34] - The company is committed to sustainability, achieving 89% of suppliers certified in food safety initiatives and sourcing 94% cage-free eggs [23][24] - Yum! Brands plans to maintain a strong and flexible balance sheet while returning excess capital to shareholders [44][45] Q&A Session Questions and Answers Question: Guidance for the year and confidence in achieving 8% operating profit growth - Management remains on track to deliver 8% core operating profit growth, with solid performance expected in the second half [53][54] Question: Technology capabilities and their impact on metrics - The Byte strategy is positively impacting both top and bottom line, with strong correlations between digital sales mix and sales growth [61][62] Question: Future capital intensity and CapEx benchmarks - The company will continue to be asset-light, maintaining a low percentage of restaurant ownership while ensuring high returns on tech investments [71][72] Question: Beverage strategy and differentiation - Taco Bell is well-positioned in the beverage market, leveraging successful proprietary drinks and expanding the Live Mas Cafe concept [76][77] Question: Consumer environment and brand positioning - Despite a challenging consumer environment, Taco Bell has consistently shown positive sales growth across all income bands, indicating strong brand resilience [80][81]

Core Insights - Yum Brands reported quarterly earnings and revenue that fell short of analysts' expectations, primarily due to declines in same-store sales for Pizza Hut and KFC in the U.S. [1] Financial Performance - The company reported a second-quarter net income of $374 million, or $1.33 per share, an increase from $367 million, or $1.28 per share, a year earlier [1] - Adjusted earnings per share were $1.44, slightly below the expected $1.46 [3] - Net sales increased by 10% to $1.93 billion, but this was below the expected $1.94 billion [2][3]

Financial Performance - System sales grew by 4% YoY in Q2, excluding F/X impact[5] - Same-store sales increased by 1% YoY in Q2[5] - Operating Profit reached $304 million in Q2, a 14% increase YoY[5] - Diluted EPS grew to $0.58, a 5% increase YoY, or 15% excluding mark-to-market impact & F/X[5] - Digital sales exceeded $5 billion in 1H 2025[15] Store Expansion and Franchising - The company added 336 net new stores in Q2 and 583 in 1H[7] - Net new unit contribution to system sales was 4% in Q2[7] - KFC has 12,238 total stores, with 14% franchised[10] - Pizza Hut has 3,864 total stores, with 6% franchised[10] Brand Performance - KFC system sales grew by 5% YoY, with a 1% increase in same-store sales in Q2[20] - KFC's operating profit margin was 14%, a 90 bps increase YoY[20] - Pizza Hut system sales grew by 3% YoY, with a 2% increase in same-store sales in Q2[27] - Pizza Hut's operating profit grew by 16% YoY, with an operating profit margin of 83%, a 90 bps increase YoY[27] Capital Returns - The company targets $3 billion in capital returns for 2025-26 and $45 billion for 2024-26[37] - Net cash by the end of June 2025 was $28 billion[37]

Core Insights - Yum China Holdings, Inc. (YUMC) is set to report its second-quarter 2025 results on August 5, with expectations of adjusted earnings per share (EPS) of $0.57, reflecting a 3.6% increase year-over-year, and total revenues projected at $2.78 billion, indicating a 3.9% growth from the previous year [1][3][10] Financial Performance - In the last reported quarter, YUMC's adjusted earnings fell short of the Zacks Consensus Estimate by 1.3% and decreased 8.5% year-over-year, while total revenues slightly missed the consensus by 4.2% but grew 0.7% from the year-ago quarter [1][2] - YUMC has surpassed earnings estimates in three of the last four quarters, with an average surprise of 8.1% [2] Revenue and Growth Drivers - The anticipated revenue growth in Q2 2025 is attributed to steady same-store transaction growth and new unit expansion, supported by effective strategies and improved value offerings [4][10] - Revenue from KFC is expected to grow by 4.8% to $2.11 billion, while Pizza Hut's revenue is projected to increase by 0.4% to $542 million [5] Cost Management and Profitability - The adjusted operating profit margin is expected to rise by 30 basis points to 10.2%, with adjusted operating profit increasing by 7.1% to $284.9 million [7][10] - Despite challenges from wage inflation and a higher delivery mix, disciplined cost management and margin expansion are expected to enhance profitability [5][10] Earnings Prediction Model - The current model does not predict an earnings beat for YUMC, as it has an Earnings ESP of 0.00% and a Zacks Rank of 2 (Buy) [8][9]

Company Overview - Yum! Brands is the parent company of Taco Bell, KFC, Pizza Hut, and Habit Burger & Grill, with a current market capitalization of $41 billion [3] - The company is expected to announce its second-quarter earnings on August 5, 2025, with analysts estimating earnings of $1.46 per share on $1.94 billion in revenue, reflecting a 12% increase in earnings year-over-year and a 10% rise in sales [2] Financial Performance - In the past twelve months, Yum! Brands reported total revenue of $7.7 billion, with operating profits of $2.4 billion and a net income of $1.4 billion [3] - The company delivered strong Q1 results, driven by earnings growth and momentum at Taco Bell and KFC, despite a slight revenue miss [3] Historical Trends - Historically, Yum! Brands stock has exceeded expectations after earnings announcements 63% of the time, with a median increase of 1.9% in one day and a maximum observed growth of 10% [2][6] - Over the last five years, there have been 19 recorded earnings data points, with 12 positive and 7 negative one-day returns, indicating a 63% occurrence of positive returns [6] Market Reaction - The results of Yum! Brands will significantly impact market reactions against consensus expectations, and historical trends may favor event-driven traders [3][4] - The correlation between short-term and medium-term returns following earnings can provide a relatively lower-risk strategy for traders [7]

Core Viewpoint - Yum Brands (YUM) is expected to report quarterly earnings of $1.45 per share, a 7.4% increase year-over-year, with revenues projected at $1.93 billion, reflecting a 9.5% year-over-year growth [1]. Earnings Projections - The consensus EPS estimate for the quarter has been revised upward by 0.2% over the past 30 days, indicating a collective reassessment by analysts [2]. - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3]. Revenue Estimates - Analysts estimate 'Revenues- Company sales' to reach $680.67 million, indicating a year-over-year increase of 19% [5]. - 'Revenues- Franchise and property revenues' are forecasted at $826.92 million, suggesting a 4.8% year-over-year change [5]. - 'Revenues- Franchise contributions for advertising and other services' are expected to be $426.07 million, reflecting a 6% increase from the previous year [5]. - The KFC Division's franchise contributions for advertising and other services are projected at $159.68 million, a 7.2% year-over-year increase [6]. Same-Store Sales and Restaurant Metrics - System same-store sales for the Taco Bell Division are expected to show a year-over-year change of 5.2%, slightly up from 5.0% last year [6]. - The number of restaurants in the KFC Division (Franchise & License) is estimated to reach 31,934, compared to 30,255 a year ago [7]. - Total restaurants in the Taco Bell Division are projected at 8,803, up from 8,565 in the same quarter last year [7]. - The number of company-owned Taco Bell restaurants is expected to be 510, an increase from 488 last year [8]. - The total number of restaurants in the Pizza Hut Division is estimated at 19,921, compared to 19,864 a year ago [9]. - The total number of restaurants across all divisions is projected to reach 61,524, up from 59,498 last year [10]. Stock Performance - Over the past month, Yum shares have returned -3.9%, while the Zacks S&P 500 composite has increased by 2.3% [11]. - Yum currently holds a Zacks Rank 2 (Buy), indicating potential outperformance in the near future [11].

Core Viewpoint - YUM! Brands, Inc. is expected to report second-quarter 2025 results on August 5, with earnings per share estimated at $1.45, reflecting a 7.4% year-over-year increase, and revenues projected at $1.93 billion, a 9.5% increase from the previous year [1][2][10] Group 1: Revenue and Earnings Estimates - The Zacks Consensus Estimate for earnings per share is $1.45, indicating a 7.4% increase from the prior-year quarter [2] - Revenue estimates are pegged at $1.93 billion, representing a 9.5% increase from $1.76 billion in the prior-year quarter [2][10] Group 2: Growth Drivers - Revenue growth is likely driven by strong performances from Taco Bell U.S. and KFC International, alongside rapid digital expansion across the portfolio [3][10] - Investments in the Byte by Yum! platform, including kiosks and app personalization, are expected to enhance consumer experiences and increase order values [3] - AI-powered marketing initiatives and loyalty programs, such as the "build your own Luxe Box" campaign, are anticipated to deepen brand loyalty and increase traffic [4] Group 3: Menu Innovation and Consumer Engagement - New beverage-led concepts like Taco Bell's Live Mas Cafe and KFC's Quench pilot are expected to attract younger demographics and contribute to top-line growth [5] - Menu innovations, including global items like the Double Down Zinger and Zinger Nachos, are projected to boost consumer engagement and same-store sales [5] Group 4: Same-Store Sales and Revenue Projections - Same-store sales are predicted to grow by 2.2% year-over-year in the upcoming quarter [6] - Revenue estimates for KFC, Taco Bell, and Habit Burger are projected to increase by 11.2%, 7.3%, and 16.3%, respectively, while Pizza Hut revenues are expected to rise by 1.8% [6] Group 5: Bottom-Line Performance - The company's bottom-line performance is expected to benefit from disciplined cost management, operational efficiency, and improved store-level margins [7][10] Group 6: Earnings Prediction Model - The model indicates a likelihood of an earnings beat for YUM! Brands, supported by a positive Earnings ESP of +1.34% and a Zacks Rank of 2 [8][9]