How reliable are YUM's earnings forecasts?

YUM! Brands' earnings forecasts have shown variability and discrepancies with actual earnings, indicating that they may not be entirely reliable. Here's an analysis based on the latest data: 1. **Recent Performance**: YUM's most recent reported earnings were for Q4 2024, with a net income of $423 million and a diluted EPS of $1.49. The company's revenue for the same period was $2.36 billion. |code|Ticker|Name|Date|Total Revenue|Net Income|Diluted EPS|market_code| |---|---|---|---|---|---|---|---| |YUM|YUM.N|YUM! Brands|2024 Q1|1.598E9|3.14E8|1.1|169| |YUM|YUM.N|YUM! Brands|2024 Q2|1.763E9|3.67E8|1.28|169| |YUM|YUM.N|YUM! Brands|2024 Q3|1.826E9|3.82E8|1.35|169| |YUM|YUM.N|YUM! Brands|2024 Q4|2.362E9|4.23E8|1.49|169| 2. **Growth Rates**: The diluted EPS decreased by 8.02% compared to the previous year, and the net income fell by 8.64%. This decline suggests that the company's earnings are trending downwards, which could impact the reliability of future earnings forecasts. |code|Ticker|Name|Date|Net Income YoY|Total Revenue YoY|Diluted EPS YoY|market_code| |---|---|---|---|---|---|---|---| |YUM|YUM.N|YUM! Brands|2024 Q1|4.666666666666667|-2.857142857142857|4.761904761904765|169| |YUM|YUM.N|YUM! Brands|2024 Q2|-12.200956937799043|4.5050385299347955|-12.328767123287667|169| |YUM|YUM.N|YUM! Brands|2024 Q3|-8.173076923076923|6.908665105386416|-7.534246575342457|169| |YUM|YUM.N|YUM! Brands|2024 Q4|-8.639308855291576|16.01178781925344|-8.024691358024699|169| 3. **Surprises**: The company's revenue for Q4 2024 was $22 million more than expected, which indicates a positive surprise. However, the EPS surprise was only $0.01, which is negligible. This mixed result suggests that while the company may exceed revenue expectations, its earnings may not follow suit. |code|Ticker|Name|Date|Revenue Surprise|EPS Surprise|Net Income|market_code| |---|---|---|---|---|---|---|---| |YUM|YUM.N|YUM! Brands|2024 Q1|-1.1E8|-0.06|3.14E8|169| |YUM|YUM.N|YUM! Brands|2024 Q2|-5.0E7|0.02|3.67E8|169| |YUM|YUM.N|YUM! Brands|2024 Q3|-7.4E7|-0.04|3.82E8|169| |YUM|YUM.N|YUM! Brands|2024 Q4|2.2E7|0.01|4.23E8|169| 4. **Analyst Ratings**: Analysts have recently lowered their ratings and earnings per share estimates for YUM, which could reflect a lack of confidence in the company's near-term earnings outlook. This sentiment could impact the reliability of future earnings forecasts. 5. **Market Conditions**: The overall market conditions and uncertainties in the restaurant industry, including the impact of tariffs, could affect YUM's earnings. These external factors can make it challenging to predict the company's future earnings accurately. In conclusion, while YUM has had some positive surprises in revenue, the decline in earnings and the analysts' cautious outlook suggest that the company's earnings forecasts may not be entirely reliable. Investors should exercise caution and consider these factors when evaluating YUM's earnings projections.