Yum! Brands, Inc. YUM is scheduled to report second-quarter 2026 results on July 30, before the opening bell.
YUM’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, the average surprise being 3%.
Trend in the Estimate Revision of YUM
The Zacks Consensus Estimate for second-quarter earnings per share (EPS) is pegged at $1.59, indicating a rise of 10.4% from $1.44 reported in the year-ago quarter.
Yum! Brands, Inc. Price and EPS Surprise
Yum! Brands, Inc. price-eps-surprise | Yum! Brands, Inc. Quote
For revenues, the consensus mark is pegged at $2.18 billion. The metric suggests a rise of 12.8% from the year-ago quarter’s figure.
Let us take a look at how things might have shaped up in the quarter to be reported.
Factors Likely to Shape YUM’s Quarterly Results
Revenues
Yum! Brands' second-quarter performance is likely to have benefited from continued strength at Taco Bell, robust international expansion and sustained digital momentum. The company's "Raise the Bar" strategy, centered on consumer engagement, restaurant economics and Byte by Yum!, is expected to have supported growth in the quarter.
Taco Bell is likely to have remained the primary growth driver. Management highlighted continued momentum from the Luxe Value Menu, menu innovation, improved consumer satisfaction and transaction growth. Digital ordering, loyalty engagement and AI-enabled initiatives, including dynamic drive-thru menu boards, are also expected to have supported same-store sales and market-share gains.
Our model predicts second-quarter revenues from Taco Bell and KFC to rise 6.1% and 17.9% year over year, to $754.1 million and $1 billion, respectively.
KFC's international business is also expected to have supported revenues through menu innovation, beverage expansion and industry-leading unit growth. Continued restaurant development across key international markets, coupled with confidence in the brand's development pipeline despite geopolitical uncertainty, is likely to have contributed to system sales growth. Digital initiatives are expected to have remained another growth catalyst. Expansion of the Byte platform, increasing AI adoption and continued growth in loyalty programs are likely to have enhanced customer engagement and supported sales across the company's brands. Our model predicts second-quarter property and franchise revenues to rise 9.4% year over year to $913.8 million.
Earnings
Yum! Brands' margins are expected to have benefited from continued strength at Taco Bell and improving restaurant-level profitability at KFC. Management raised Taco Bell U.S. restaurant-level margin guidance following stronger-than-expected sales momentum, while KFC's ongoing focus on restaurant economics and operating efficiencies is likely to have supported profitability.
However, profitability is likely to have been partly offset by higher marketing and innovation investments, increased franchise and license expenses related to the Hut Forward initiative, and the timing of project-related G&A spending. In addition, Habit Burger's store optimization efforts are expected to result in approximately $5 million of non-cash closure expenses during the quarter. Our model predicts the second quarter total costs and revenues to rise 10.1% year over year to $1.44 billion.
What Our Model Says About YUM Stock
Our proven model does not conclusively predict an earnings beat for Yum! Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that's not the case here.
Earnings ESP for YUM: Yum! Brands has an Earnings ESP of -0.63%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Yum! Brands’ Zacks Rank: The company currently has a Zacks Rank #3.
Stocks With the Favorable Combination
Here are some stocks worth considering from the Zacks Retail-Wholesale sector that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat.
BJ's Restaurants, Inc. BJRI currently has an Earnings ESP of +7.51% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the to-be-reported quarter, BJRI's earnings are expected to decline 10.3%. BJRI's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 136%.
CAVA Group, Inc. CAVA currently has an Earnings ESP of +20.30% and a Zacks Rank of 3.
In the to-be-reported quarter, CAVA’s earnings are expected to increase 6.3%. CAVA's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 16.6%.
The Cheesecake Factory Incorporated CAKE currently has an Earnings ESP of +2.76% and a Zacks Rank of 3.
In the to-be-reported quarter, Cheesecake Factory’s earnings are expected to register a 0.9% year-over-year rise. Cheesecake Factory’s earnings surpassed estimates in each of the trailing four quarters, with an average beat of 6.7%.
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Yum! Brands, Inc. (YUM): Free Stock Analysis Report
BJ's Restaurants, Inc. (BJRI): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).