Yahoo Finance Yum! Brands (YUM) Stock Up 18% in Past 3 months: Here's How
Shares of Yum! Brands, Inc. YUM have gained 18% in the past three months compared with the industry’s growth of 13%. Solid demand, unit development and comp growth are driving the company’s performance.
The Zacks Rank #2 (Buy) company has an impressive long-term earnings growth rate of 11.8%. In 2023, the company’s sales and earnings are expected to witness growth of 6.2% and 15.5%, respectively, from the 2022 estimated levels.
Let’s delve deeper to find out the factors that make Yum! Brands an attractive pick.
Growth Drivers
The company is focusing on expansion efforts to drive growth. In third-quarter 2022, the company opened 979 gross new units across 74 countries, including nearly 392 at Pizza Hut and 485 at KFC. Given the unit economics and a healthy development pipeline, the company anticipates achieving long-term growth of 4-5% in the upcoming periods.
Robust growth of Taco Bell is also aiding the company’s growth. In the second and third quarters of 2022, Taco Bell’s comps increased 8% and 6%, respectively, year over year. Taco Bell recorded 98 gross new restaurant openings in third-quarter 2022.
The company announced that it is focused on building momentum in different markets like the U.K., Spain and India. We expect Taco Bell's revenues to increase 5.8% in 2022.
Image Source: Zacks Investment Research
Despite the challenging environment, the company impressed investors with robust same-store sales growth in second-quarter 2022. The company reported consolidated same-store sales (excluding China) growth of 5%. In the quarter, same-store sales at Taco Bell, KFC and Pizza Hut rose 6%, 7% and 1% year over year, respectively.
The company has been benefiting from a recovery in emerging markets. Given the emphasis on consumer value proposition, expanded digital access and franchise partners, the company anticipates the momentum to continue in the upcoming periods.
Solid digital sales bode well for the company. In third-quarter 2022, the company reported digital sales of more than $6 billion. Moreover, it reported solid adoption of Dragontail Systems.
The initiative paves a path to tap the powers of artificial intelligence to streamline the end-to-end food preparation process, as well as improve its delivery capabilities. In the second quarter, the company expanded its global adoption of the platform to 28 markets across both KFC and Pizza Hut brands.
Other Stocks to Consider
Investors interested in the broader Zacks Retail-Wholesale sector may consider some other top-ranked stocks like Wingstop Inc. WING, Tecnoglass Inc. TGLS and Domino's Pizza, Inc. DPZ.
Wingstop currently sports a Zacks Rank #1 (Strong Buy). WING has a long-term earnings growth rate of 12%. Shares of WING have gained 0.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and earnings per share (EPS) suggests growth of 18.4% and 16.3%, respectively, from the year-ago period’s reported levels.
Tecnoglass sports a Zacks Rank #1 at present. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average. Shares of the company have gained 50.9% in the past year.
The Zacks Consensus Estimate for TGLS’ 2023 sales and EPS suggests growth of 11.2% and 9%, respectively, from the year-ago period’s reported levels.
Domino's presently carries a Zacks Rank #2. DPZ has a long-term earnings growth rate of 12.6%. Shares of DPZ have declined 27.7% in the past year.
The Zacks Consensus Estimate for Domino's 2023 sales and EPS suggests growth of 3.8% and 17.2%, respectively, from the year-ago period’s reported levels.
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
Yum Brands, Inc. (YUM) : Free Stock Analysis Report
Domino's Pizza Inc (DPZ) : Free Stock Analysis Report
Tecnoglass Inc. (TGLS) : Free Stock Analysis Report
Wingstop Inc. (WING) : Free Stock Analysis Report