YUM Updating Our Forecasts Ahead of Yum Brands 8.1 Earnings Release

By Mark Kalinowski Published on July 22, 2019 at 12:00 AM

Ahead of Yum Brands’ (YUM; Buy) second-quarter earnings release scheduled for before the market open on Thursday, August 1st, we raise our Q2 EPS estimate by $0.01 to $0.89, placing us two cents above sell-side consensus according to Consensus Metrix. Our EPS estimate increase is driven by (1) an update to our Q2E Taco Bell same-store sales projection to +5% (which places us as tied for the high on the sell-side in this respect), from our prior +4%, and versus consensus of +3.7% (please keep in mind that Yum Brands does not report its same-store sales out past the decimal point), and (2) taking up our worldwide Q2E KFC same-store sales estimate to +4% (from +3%).

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SBUX Updating Our Rating on Starbucks Ahead of 7.25 Earnings Release

By Mark Kalinowski Published on July 18, 2019 at 12:00 AM

Ahead of Starbucks’ (SBUX) fiscal Q3 earnings release scheduled for after the market close on Thursday, July 25th, we upgrade SBUX to Buy (from Neutral). Some of the concerns we had 3-6 months ago have been alleviated to a meaningful degree, including (1) the possibility that a serious run for office by former CEO Howard Schultz could have an adverse effect on the business; Mr. Schultz has put his campaign on hold which significantly alleviates this risk, and (2) concerns about competition in China — public filings by Luckin Coffee (LK; Not Rated) — which had its IPO this past May — give us a greater comfort level that near-term competitive threats in this key growth market can be fought off.

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