Yum China sales result matches Street view, shares up

Some analysts believe the second quarter will be a quiet one for Yum YUM, -0.24% due to the value-price driven environment across the quick-service industry and increased competition both domestically and overseas. Investors had anxious about the fundamentals of Yum’s China business, which recently posted bumpy results due to food safety scares and company missteps.

LOS ANGELES Yum Brands Inc on Wednesday said its China business was gaining strength, sending shares of the KFC, Taco Bell and Pizza Hut brands owner higher as it prepared to spin off the key Chinese unit in the autumn. Analysts polled by Thomson Reuters expected earnings of $0.74 per share.

Estimize, a software platform that gathers estimates from buy-side analysts, hedge-fund managers, academics and others, is expecting EPS of 76 cents per share. Eight analysts surveyed by Zacks expected $3.1 billion.

The Estimize crowdsourced estimate is for $3.10 billion in revenue.

Yum shares have increased 17 percent since the beginning of the year, while the Standard & Poor’s 500 index has increased slightly more than 5 percent.

Yum Brands (NYSE:YUM) last issued its earnings results on Wednesday, April 20th. Their brands – KFC, Pizza Hut and Taco Bell are well-known names in the chicken, pizza and Mexican-style food categories.

The China business, which accounts for about half of Yum’s revenue, reported an 3% system sales increase, adjusted for currency conversions.

Yum! Brands (YUM) has an average broker rating of 2.22, which is interpreted as a Buy, as rated by 18 equity analysts.

Yum! Brands (YUM): 14 investment research analysts covering Yum!

In the second quarter, the company opened 373 new restaurants worldwide, with 72% of this development occurring in emerging markets. This represents our fourth-consecutive quarter of positive same-store sales growth at KFC China despite the second quarter being our most hard of the year from a historical sales overlap standpoint.

Shares of Yum Brands Inc. Oppenheimer Holdings now has a “Buy” rating on the stock.

Deutsche Bank, on the other hand, sees the future as more unclear and are proceeding with caution. Analysts expect the variance to be within $6.58 of the average price.

Currently, YUM has a Zacks Rank #3 (Hold), but it is subject to change following the release of the company’s latest earnings report.

“We believe the level of industry-wide value and bundling offerings may negatively weigh on Yum results in the near-term as most product differentiation has been overshadowed by pricing promotions over the last few years”, the bank said.