By Mark Kalinowski
Published on January 24, 2019 at 12:00 AM
With this report, we once again raise our data-driven Kalinowski Quick-Service Pizza Index for Q4E, this time from +1.2% to +2.4%. (In late November, we had already moved our Q4E index number from +0.3% to +1.2%, based on our checks regarding the first half of the fourth quarter.) Our latest increase is based on our latest proprietary checks/data as regards same-store sales performance for this segment during the second half of November and all of December.
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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 December 5, 2018 at 12:00 AM
Earlier today, Yum Brands (YUM; Buy) hosted an Analyst Meeting in New York City. The theme was “A World of Opportunities,” which highlights the global opportunities for the company’s KFC, Pizza Hut, and Taco Bell brands. Management says it wants all three brands to be distinctive, relevant, and easy brands. Going forward, management also indicates that collaboration amongst the brands will increase in importance, with management saying “our ability to collaborate will set us apart from our competitors.” This will be a positive if it can come to fruition, but for those on the Street — and we have been amongst them — who believe value can be unlocked by separating out one or more of Yum’s brands, management seems more dead set against that path than ever. Management states that there’s “simply no other restaurant company or retailer in the world like us,” and that “we’ve done from a mindset of being equity operators to being brand builders.” Management adds that “the four growth drivers drive same-store sales, they drive new unit growth, they drive system sales.” Those four growth drivers are: (1) distinctive, relevant, and easy brands, (2) unrivaled culture and talent, (3) bold restaurant development, and (4) unmatched franchise operating capability. We reiterate our Buy rating on YUM and note the following:
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