Yum! Brands (YUM) Beats On Earnings, China Sales Decline

Yum! Brands Inc. (YUM - Analyst Report) is the world’s largest restaurant company when it comes to number of system units with nearly 38,000 restaurants that are located in over 120 countries worldwide. The company’s brands- KFC, Pizza Hut and Taco Bell-are global leaders of the chicken, pizza, and Mexican-style food categories respectively.

Like most of the members of the restaurant industry, YUM has felt the pressure of rising foods costs and increased competition. YUM has also faced challenges presented from international markets, just as other industry members have, with its biggest issue coming from a food safety scandal that took place in China in July of 2014. 

The food safety scandal of nearly a year ago has had significant affects on the sales of the company’s brands of KFC and Pizza Hut in China, which raised investors’ anticipation for YUM’s latest earnings report.
 
This is especially true given that the recent earnings estimate revisions for YUM as the consensus estimate has been decreasing in the time leading up to the report. YUM has not seen substantial success in their recent earnings reports with an average surprise of only 1.53%, though in the last quarter which ended 3/2015 the company posted a beat of 11.11%.
 
Currently YUM is a Zacks Rank #3 (Hold), but that could definitely be changing with the company’s earnings report that was just released. Below are a few key stats that have been highlighted from the report:
 
Earnings: YUM was able to beat Zacks Consensus estimates of $.63 per share with an actual earnings per share of $.69 for the quarter ended 6/2015 (these figures take out stock option expenses).  
 
Revenues: Revenues for YUM missed, with the company posting revenue of $3.11 billion. This was below the consensus estimate for revenue of $3.18 billion.
 
Key Stat to Note: YUM saw a major hit in its same store sales in China with a decline of 10% as the company still is feeling the effects of its food safety scandal last July in the country.
 
Stock Price: YUM’s stock was down 1.13% to $90.83 per share in after hour trading at the time of writing.
 
Be sure to check back later with Zacks for a full write up on YUM!