YUM’s Earnings Mixed, China in Focus

YUM’s Earnings Mixed, China in Focus

YUM Brands (YUM) reported earnings after the bell today. The company reported EPS of $0.87, beating the Zacks Consensus EPS Estimate of $0.84, and revenues came in at $2.72 billion, just below the Zacks Consensus Revenue Estimate of $2.8 billion.

One of the major concerns going into this earnings announcement was the impact of sales in China. Management stated that Same Store Sales increased 9% in the first quarter 2014 (analysts were expecting 9.2%). Moreover, management stated that they expect to open 700 new restaurants in China during 2014. Overall, it appears as though the KFC segment has moved pass their poultry suppliers issues from last year, and are now gaining some traction in China.

New to the quarter was the revamped breakfast menu in their Taco Bell restaurants; this was designed to compete with the likes of McDonalds (MCD), Dunkin Donuts (DNKN), and Starbucks (SBUX). Currently, McDonalds has the largest market share of fast food breakfast at 30%, but the Waffle Taco, and the AM Crunchwrap are expected to compete with the traditional McDonalds breakfast menu.

But for taco lovers out there, the most important short term news is the launch of the Spicy Chicken Cool Ranch Doritos Locos Taco, which is debuting on May 1, 2014!

In afterhours trading YUM has risen over 2% on mild volume, indicating the streets approval of their EPS beat. Zacks will have a fully detailed report into YUM’s earnings numbers tomorrow morning.

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