By Mark Kalinowski
Published on January 23, 2019 at 12:00 AM
Following the completion of our data-driven check process for Yum Brands (YUM; Buy), we raise our Q4E same-store sales projections for each of the company’s domestic brands. Our Q4E same-store sales forecast for Taco Bell rises by one percentage point to +5% (above sell-side consensus of +4%), and we would not rule out the possibility of an even better performance should a best-case scenario arise. Our Q4E same-store sales estimate for KFC U.S. goes up by one percentage point to +3% (above sell-side consensus of +2%), and our Q4E same-store sales projection for Pizza Hut U.S. goes up by one percentage point to +1% (now matching sell-side consensus). All of this has the effect of increasing our Q4E EPS estimate by $0.05 to $0.99, placing us two cents above sell-side consensus ahead of Yum Brands’ planned fourth-quarter earnings release scheduled for before the market open on Thursday, February 7th. Our full-year 2018E EPS estimate rises by $0.05 to $3.75. Given this higher base of anticipated earnings coming off of 2018, and assuming some momentum carries over, we also take up our 2019E and 2020E EPS estimates by $0.02 and $0.03, respectively, to $3.80 and $4.25. We reiterate our Buy rating on YUM, and note the following: * For the last 33 times there has been a published Kalinowski Forecast for Taco Bell, that forecast has been within 100 basis points of what Taco Bell reports 60.6% of the time (20 out of 33 times), and within 200 basis points of what Taco Bell reports 87.9% of the time (29 out of 33 times).
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By Mark Kalinowski
Published on January 22, 2019 at 12:00 AM
Ahead of Starbucks’ (SBUX; Neutral) planned fiscal Q1 2019 (calendar Q4 2018) earnings release planned for after the market close this Thursday (January 24th), we raise our fiscal Q1 same-store sales forecast for the Americas (and the U.S.) by one percentage point, to +4%, placing us above sell-side consensus (as measured by Consensus Metrix) of +3%. The raised forecast has the effect of increasing our Q1E EPS projection by one cent, to $0.66, also placing us one cent above sell-side consensus of $0.65. Our full-fiscal 2019E EPS forecast goes up by $0.01, to $2.66. Given this slightly higher anticipated base of earnings coming off of fiscal 2019, our fiscal 2020E EPS estimate rises by $0.01, to $3.01. We reiterate our Neutral rating on SBUX.
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By Mark Kalinowski
Published on January 13, 2019 at 12:00 AM
Based on our recent, data-driven checks, we raise our Q4E 2018 North American same-store sales forecast for Papa John’s (PZZA; Buy) by +330 basis points, to -5.5%. This places us 150 basis points better than sell-side consensus, according to Consensus Metrix data. Also, best-case, some further update may be possible when Papa John’s reports its Q4 results (likely report date late February), as our checks actually came in somewhat better than our -5.5% updated forecast. We hear that a good portion of December 2018 in particular was helped by promotional activity, an encouraging sign that while the business is still clearly hampered by self-inflicted wounds, the worst is likely over. Indeed, it does seem that Papa John’s the brand was in the news for all the wrong reasons during Q3 2018, but that the media largely moved on to other narratives during Q4 2018. This is good news for the Papa John’s brand, the company, its employees, the brand’s franchisees and their employees, and the many other stakeholders involved — including PZZA shareholders. With PZZA shares down by about -28% (to their closing price of $42.63 as of 1/9/19) since their recent closing high of $59.04 this past November 15th, the business on the road to recovery, and refranchising opportunities available (with Papa John’s North American store base 19.3% company-owned as of the end of Q3 2018), the rewards outweigh the risk, and we keep our Buy rating on PZZA. We note the following:
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