Retail

Yum!... When Raised Guidance Isn't Really Raised (YUM)

Yum! Brands Inc. (NYSE: YUM) has just beat earnings, although the guidance is lackluster  This is the one in its segment we believe has the safest dividend of its peers with room for added growth down the road and the added stability.  The owner of KFC, Taco Bell, and Pizza Hut posted $0.58 EPS on $2.57 billion in revenues, which beat Thomson Reuters consensus targets of $0.54+ EPS and $2.54 billion in revenues.  Worldwide system sales were up 4% outside of currency translations.

Outside of items, it sees 12% earnings per share growth for the year.  That comes to $2.43 EPS versus its earlier $2.39 forecast.  Unfortunately, Thomson Reuters is at $2.48 EPS for the year.

The company’s China system sales rose 15%.  The gain of +4% for same store sales in China was under our forecast of 5%.  The U.S. same store sales were unfortunately flat, and that is said to be from a 7% decline at KFC.

Yum! closed up 2% at $41.71, but shares are down under $40.50 in the after-hours session.  This is probably not going to be viewed as awful in tomorrow’s analyst upgrades and downgrades, but there is nothing here to be excited about.

Update at 4:46 PM EST: Yum is down 3.3% at $40.32 on over 700,000 shares in the after-hours trading session.

JON C. OGG

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