Investors in Yum! Brands, Inc. (NYSE:YUM) had a good week, as its shares rose 7.5% to close at US$166 following the release of its quarterly results. Revenues were US$2.1b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$5.92, an impressive 218% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, Yum! Brands' 20 analysts currently expect revenues in 2027 to be US$8.66b, approximately in line with the last 12 months. Statutory earnings per share are forecast to plunge 47% to US$6.78 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$8.64b and earnings per share (EPS) of US$6.79 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
Check out our latest analysis for Yum! Brands
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$172. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Yum! Brands analyst has a price target of US$200 per share, while the most pessimistic values it at US$147. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Yum! Brands' past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 1.2% annualised decline to the end of 2027. That is a notable change from historical growth of 6.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Yum! Brands is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$172, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Yum! Brands. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Yum! Brands analysts - going out to 2028, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 5 warning signs for Yum! Brands (4 are potentially serious!) that you need to be mindful of.
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