Yum China Holdings, Inc. YUMC is scheduled to report third-quarter 2024 results on Nov. 4, before the opening bell.

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In the last reported quarter, the company’s adjusted earnings topped the Zacks Consensus Estimate and rose 17% year over year. Total revenues missed the consensus estimate by 3.3% but inched up 1% from the year-ago quarter.

YUMC’s earnings surpassed expectations in three of the trailing four quarters and missed on the remaining one occasion, the average surprise being 26.6%.

Trend in Estimate Revision of YUMC

The Zacks Consensus Estimate for earnings per share (EPS) has trended upward to 68 cents from 67 cents over the past 30 days, indicating 15.3% growth from the prior-year period.

The consensus estimate for revenues is pegged at $3.08 billion, indicating a 5.7% increase from the year-ago period.

Factors to Shape Yum China’s Quarterly Results

Yum China’s top line is expected to have increased year over year due to net new unit contributions driving the robust total system sales growth. This, alongside the company’s focus on value-for-money and innovative new products, automation and AI accompanied by favorable pricing, is likely to have added to the uptrend.

Our model expects revenues from KFC (contributed 75% to second-quarter 2024 total revenues) and Pizza Hut (contributed 20.2% to second-quarter total revenues) to grow year over year by 5.6% to $2.31 billion and 3.7% to $621.4 million, respectively.

The tailwinds mentioned above are expected to have been incremental for growth in guest traffic, reflecting the resilience of the several initiatives undertaken to improve the profitability of the company.

Moreover, the bottom line of YUMC is expected to have improved year over year on the back of strategic initiatives undertaken to improve operational efficiency and stabilize restaurant margin along with benefits realized from the increased top line. Although value-for-money offerings and wage inflation are likely to have restricted the prospects to some extent, favorable commodity prices paired with lower advertising expenses and performance-based compensation costs are expected to have boosted the prospects.

We expect adjusted operating profit to increase 1.5% year over year to $332 million. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) is also expected to grow year over year by 2.9% to $453.9 million.

What Our Model Unveils for YUMC

Our proven model predicts an earnings beat for Yum China 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.

Earnings ESP: YUMC has an Earnings ESP of +1.85%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Poised to Beat on Earnings

Here are some other stocks from the Zacks Retail-Wholesale sector, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.

CAVA Group, Inc. CAVA currently has an Earnings ESP of +3.38% and a Zacks Rank of 1 at present.

CAVA’s earnings for the third quarter of 2024 are expected to increase 83.3%. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 257.7%.

Sweetgreen, Inc. SG currently has an Earnings ESP of +4.76% and a Zacks Rank of 3.

SG’s earnings for the third quarter are expected to increase 27.3%. It reported lower-than-expected earnings in each of the trailing four quarters, the negative average surprise being 12%.

Williams-Sonoma, Inc. WSM has an Earnings ESP of +1.14% and a Zacks Rank of 3.

WSM’s earnings for the fiscal third quarter are expected to decline 3.8%. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 17.4%.

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