2023-05-03 11:31:42 ET
Yum Brands ( NYSE: YUM ) fell on Wednesday after Q1 EPS came up slightly short of expectations.
Despite strong same-store sales for the Taco Bell, KFC, and Pizza Hut chains, higher G&A spending led to the overall bottom line miss. G&A expenses came in at 17.1% of sales vs. 16.3% consensus. Core operating profit rose 11% across the company, led by a 12% increase for the KFC division. Core operating profit was hit by a one percentage point headwind from Russia. EPS came in at $1.05 to fall short of the consensus mark of $1.12.
During the Yum Brands ( YUM ) conference call, management pointed to improving trends with the labor market availability and commodities pricing.
Digging through the earnings report, Evercore ISI analyst David Palmer noted company-operated restaurant margin was 22%, which was level from a year ago but slightly below the consensus of mark 22.7%. "Still, this is far higher than other company-owned fast-food peers such as McDonald’s and Wendy’s in the mid-teens recently and still facing YoY pressure," noted Palmer in his defense of the Outperform-rated restaurant stock.
Shares of Yum Brands ( YUM ) were down 3.85% at 11:27 a.m. on Wednesday to cut into what was a pre-earnings rally of more than 10% in April with investor expectations high over the impact of the China reopening.
More on Yum Brands:
- Yum!: Too Expensive From Attractive Financials
- Read more breakdowns on Yum Brands from Seeking Alpha analysts
- View the growth metrics
- See the financial and valuation comparisons to sector peers
- Dig into the Seeking Alpha Quant Rating
For further details see:
Yum Brands is defended at Evercore ISI with margins said to look strong