After the close on Wednesday, Yum! Brands, Inc. (NYSE:YUM) reported earnings. The report showed that Yum! Brands, Inc. earned $0.76. Wall Street was expecting big things from YUM, which is dubbed the largest fast-food company. YUM Raised FY Growth View to At Least 12%. Yum Q1 revenue was $2.74 bln vs $2.43 bln estimates.
Analysts polled were looking for earnings per share of $0.73 on revenue of $2.7 billion. It is important to note that same time last year, YUM reported earnings of $0.54 on revenue of $2.4 billion. The fact that analysts’ forecasts are above last year’s numbers means that they are bullish on the stock.
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YUM operates a bunch of popular restaurants such as Taco Bell, Pizza Hut and KFC. YUM’s expansion into China has greatly lifted earnings in the past, as well as analysts’ bullishness. China now accounts for 45% of the company’s profits.
In recent times, YUM has been focusing on international sales to help out with sloppy numbers here in the US. The good news for the company is that in their 4th quarter earnings, we saw a 10% gain in US profit which may signal a revival in US sales.
Remember, US growth is very important to the company because Taco Bell accounts for 60% of US profits. Recently, YUM has been focusing on reviving Taco Bell by offering new products such as the new taco shells that are made out of Doritos. This move comes after the company saw a setback in Taco Bell last year with the lawsuit claiming that the meat in the tacos was not real.
Moving away from the US, YUM saw strong international sales. China continued to generate strong results for Yum, with same-store sales up 14% in the country. YUM’s expansion into China has been able to offset slumping US sales in the past and will certainly be able to provide more growth as the company continues to expand in the region. In the UK, Pizza Hut just released the new hot dog stuffed crust in another attempt to revamp sales.
YUM has been changing up the options in its restaurants to help drive more traffic and sales. Unfortunately, it may be a tad too early to determine whether changes in the US and UK are having a positive effect and to what extent. YUM Brands has a good growth plan and good management. Look for this company to continue to grow internationally while recovering sales in the US.