Can Yum! Brands Deliver In Its Next Earnings?

Forbes

2 days ago

Yum! Brands (NYSE: YUM) is the parent company of Taco Bell, KFC, Pizza Hut, and Habit Burger & Grill. It is anticipated to announce its second-quarter earnings on Tuesday, August 5, 2025, with analysts estimating earnings of $1.46 per share on $1.94 billion in revenue. This would reflect a 12% increase in earnings year-over-year and a 10% rise in sales compared to the previous year's figures of $1.30 per share and $1.76 billion in revenue. Historically, YUM stock has demonstrated a pattern of exceeding expectations after earnings announcements, having risen 63% of the time with a median increase of 1.9% in one day and a greatest observed growth of 10%.
Yum! Brands delivered a robust Q1, fueled by strong earnings growth and momentum at Taco Bell and KFC. Although there was a slight revenue miss, profitability remained solid and digital sales continued to expand. While U.S. demand and weaknesses in Pizza Hut suggest caution, long-term growth objectives stay unchanged. The company boasts a current market capitalization of $41 billion. Over the past twelve months, revenue totaled $7.7 billion, with operational profitability featuring $2.4 billion in operating profits and a net income of $1.4 billion. While results will significantly impact how the market reacts against consensus expectations, recognizing historical trends can potentially favor event-driven traders.
For event-driven traders, past trends may provide an advantage, whether by taking positions before earnings or responding to moves following their release. However, if you are looking for lower volatility compared to individual stocks, the Trefis High-Quality portfolio offers an alternative, having outperformed the S&P 500 and generated returns surpassing 91% since its inception. View earnings reaction history of all stocks.
Historical Probability Of Positive Returns After Earnings
Some insights on one-day (1D) returns after earnings:
Additional observations regarding 5-Day (5D) and 21-Day (21D) returns post-earnings are outlined along with the statistics in the table below.
Relationship Between 1D, 5D, and 21D Historical Returns
A relatively lower-risk strategy (although ineffective if the correlation is weak) involves understanding the relationship between short-term and medium-term returns following earnings, identifying a pair that has the highest correlation, and making the appropriate trade. For instance, if 1D and 5D exhibit the strongest correlation, a trader may choose to go 'long' for the next 5 days if the 1D post-earnings return is positive. Here is some correlation information based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the relationship between 1D post-earnings returns and subsequent 5D returns.
Is There Any Connection With Peer Earnings?
At times, the performance of peers can impact the stock's reaction following earnings. In fact, the pricing might commence before the earnings are disclosed. Below is some historical data on the post-earnings performance of Yum Brands stock in comparison to the stock performance of peers that reported earnings just prior to Yum Brands. For a fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
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