Yum China Beats Estimates Again; Stock Up 6% on Q1 Growth

The fast food giant pushes ahead with expansion and beats analysts' expectations again.
CapitalWatch StaffApr 28,2021,21:22

A year ago at this time, the dine-out industry in China was reopening from Covid-19 lockdowns. Restaurant-goes had cut back on spending, as McKinsey & Co. reported after carrying out a survey on food consumption habits in March 2020. The research firm also found that consumers planned to focus more on health and product safety and shift away from restaurants and toward groceries. Now, however, China’s fast food chain operator Yum China shows consumers are flocking back to restaurants.

Yum China Holdings Inc. (NYSE: YUMC), which operates KFC, Pizza Hut, and Taco Bell in China, as well as some domestic restaurant chains, said revenues grew 46% from a year ago to $2.56 billion in the three months through March. Net income surged 272% to $230 million, or 53 cents per share.

Yum China noted that the “substantial” growth was in comparison to the first quarter of 2020, when the Covid-19 lockdown negatively impacted the entire restaurant industry. It did, however, see some continued impact in the first quarter of 2021, it added, amid some regional resurgences of the pandemic and additional containment measures that reduced travel during the Chinese New Year.

Compared to the fourth quarter, Q1 results also excelled – in the three months through December, Yum China booked $2.26 billion in revenues. Also, the company continued to grow in 2020, opening 1,165 new stores during the year despite the coronavirus outbreak. In 2021, it plans to open 1,000 more, according to earlier statements.

Zacks Equity Research noted that Yum China has surpassed consensus EPS estimates over the past four quarters. YUMC stock was one of the top-gainers among Chinese companies today thanks to Q1 expectation beats. The news sent YUMC stock to $63.30 per American depositary share by midday, 6% after the company reported strong financial results. Year-to-date, shares in the company are up 11% and are trading higher than before the pandemic.

Topics:Yum China, YUMC