Here's What You Should Know About Yum China Ahead of Q4 Earnings

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 RevisionThe 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 QuoteThe 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 ResultsYum 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%.What Our Model Unveils for YUMCOur proven model does not conclusively predict an earnings beat for Yum China this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as elaborated below.Earnings ESP: YUMC has an Earnings ESP of -4.13%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.Zacks Rank: The company currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.Stocks Poised to Beat on EarningsHere are some stocks from the Zacks Retail-Wholesale sector, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.Amazon.com, Inc. AMZN currently has an Earnings ESP of +4.78% and a Zacks Rank of 2.AMZN’s earnings for the fourth quarter of 2024 are expected to increase 50.5%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 25.9%.Chipotle Mexican Grill, Inc. CMG has an Earnings ESP of +1.00% and a Zacks Rank of 2.CMG reported better-than-expected earnings in each of the last four quarters, the average surprise being 9.8%. The company’s earnings for the fourth quarter of 2024 are expected to increase 14.3%.The Cheesecake Factory Incorporated CAKE currently has an Earnings ESP of +2.20% and a Zacks Rank of 2.CAKE’s earnings for the fourth quarter of fiscal 2024 are expected to increase 13.8%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 14.1%.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report The Cheesecake Factory Incorporated (CAKE): Free Stock Analysis Report Yum China (YUMC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks