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Q1 Earnings Outperformers: Yum China (NYSE:YUMC) And The Rest Of The Traditional Fast Food Stocks


Adam Hejl /
2024/06/13 3:01 am EDT

Earnings results often indicate what direction a company will take in the months ahead. With Q1 now behind us, let’s have a look at Yum China (NYSE:YUMC) and its peers.

Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.

The 14 traditional fast food stocks we track reported a decent Q1; on average, revenues were in line with analyst consensus estimates. Stocks, especially growth stocks where cash flows further in the future are more important to the story, had a good end of 2023. But the beginning of 2024 has seen more volatile stock performance due to mixed inflation data, and while some of the traditional fast food stocks have fared somewhat better than others, they collectively declined, with share prices falling 2.2% on average since the previous earnings results.

Yum China (NYSE:YUMC)

One of China’s largest restaurant companies, Yum China (NYSE:YUMC) is an independent entity spun off from Yum! Brands in 2016.

Yum China reported revenues of $2.96 billion, up 1.4% year on year, falling short of analysts' expectations by 3.2%. It was a mixed quarter for the company, with an impressive beat of analysts' gross margin estimates. On the other hand, its same store sales missed and led to revenue below expectations.

Joey Wat, CEO of Yum China, commented, "We achieved solid sales growth in the first quarter with total revenues hitting an all-time high. Our core operating profit grew modestly from last year's high base and EPS was up double digits excluding foreign currency. Meanwhile, we are marching forward with our expansion initiatives in a disciplined manner, bringing our total store count to a milestone of 15,000 stores."

Yum China Total Revenue

The stock is down 12.7% since the results and currently trades at $34.94.

Is now the time to buy Yum China? Access our full analysis of the earnings results here, it's free.

Best Q1: El Pollo Loco (NASDAQ:LOCO)

With a name that translates into ‘The Crazy Chicken’, El Pollo Loco (NASDAQ:LOCO) is a fast food chain known for its citrus-marinated, fire-grilled chicken recipe that hails from the coastal town of Sinaloa, Mexico.

El Pollo Loco reported revenues of $116.2 million, up 1.4% year on year, outperforming analysts' expectations by 4.6%. It was an incredible quarter for the company, with an impressive beat of analysts' earnings and gross margin estimates.

El Pollo Loco Total Revenue

The stock is up 23.7% since the results and currently trades at $10.63.

Is now the time to buy El Pollo Loco? Access our full analysis of the earnings results here, it's free.

Weakest Q1: Starbucks (NASDAQ:SBUX)

Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.

Starbucks reported revenues of $8.56 billion, down 1.8% year on year, falling short of analysts' expectations by 6.5%. It was a weak quarter for the company, with a miss of analysts' gross margin and earnings estimates.

The stock is down 10.3% since the results and currently trades at $79.38.

Read our full analysis of Starbucks's results here.

Dutch Bros (NYSE:BROS)

Started in 1992 by two brothers as a single pushcart, Dutch Bros (NYSE:BROS) is a dynamic coffee chain that’s captured the hearts of coffee enthusiasts across the United States.

Dutch Bros reported revenues of $275.1 million, up 39.5% year on year, surpassing analysts' expectations by 7.6%. It was a very good quarter for the company, with an impressive beat of analysts' earnings estimates and a solid beat of analysts' gross margin estimates.

Dutch Bros pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 40.3% since the results and currently trades at $39.9.

Read our full, actionable report on Dutch Bros here, it's free.

Portillo's (NASDAQ:PTLO)

Begun as a Chicago hot dog stand in 1963, Portillo’s (NASDAQ:PTLO) is a casual restaurant chain that serves Chicago-style hot dogs and beef sandwiches as well as fries and shakes.

Portillo's reported revenues of $165.8 million, up 6.3% year on year, falling short of analysts' expectations by 5.2%. It was a weak quarter for the company, with a miss of analysts' gross margin and adjusted EBITDA estimates.

The stock is down 14.6% since the results and currently trades at $10.35.

Read our full, actionable report on Portillo's here, it's free.

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