Yum! Brands Q4 2022 earnings preview: Here's what to expect

Yum! Brands (YUM), which operates KFC, Pizza Hut, Taco Bell, and Habit Burger Grill, is expected to report its fiscal fourth-quarter earnings results before market open on Wednesday, February 8.

Analysts are keeping a close eye on how value played a role this quarter amid inflation. That's in addition to the recovery in China, plus the role of digital, delivery and menu innovation in same-store sales growth and expansion plans.

Here's what Wall Street expects from the fast-food giant:

• Revenue: $1.92 billion, up 1.8% year over year

• Adjusted earnings per share: $1.26 per share, up 23.5% year over year

• Same-store sales: up 4.40%

  • KFC: up 4.84%

  • Pizza Hut: up 1.73%

  • Taco Bell: up 6.53%

  • Habit Burger Grill unit: up 0.86%

At the company's investor day, on Dec. 13, the company outlined system-sales growth of 10% for its Q4 2022, driven by strength in the Taco Bell U.S. business.

Year-to-date shares are relatively flat, up less than 1 percent.

Andrew Charles of Cowen, who has a price target of $155.00 and an Outperform rating on the stock, said there was major "upside" to Taco Bell's same-store sales, which makes up roughly 30% of the company's operating profits. Charles added that opportunities for growth include how the brand balances value and premium menu innovation and "to a lesser degree" how the company benefits from late-night sales (8 p.m.- close). That's "where the brand is having an easier time staffing versus peers," he said.

In a note from Dennis Geiger of UBS, the firm predicts strong-sales growth for Taco Bell "will be supported by pricing, everyday value, and menu innovation, while opportunity exists to improve breakfast sales, further increase digital mix, and expand units" from the current 3,000 to 7,000 in the United States.

For Pizza Hut's U.S. business, Geiger believes third-party delivery and the recent launch of a new category, melts, will drive same-store sales growth. He also said, "Multiple enhancements have improved the brand's outlook" and will help target younger consumers. For KFC, he said "global growth potential remains significant."