Sales Growth in China Leads Yum! Brands to Guide Upward

Sales growth of 22 percent in China from new and same-store sales led Yum! Brands to revise EPS growth for 2010 from 12 to 14 percent.

The restaurant conglomerate for Taco Bell, Pizza Hut, KFC, Long John Silvers, and A &W reported overall sales growth for the company of 5 percent and operating profit of 14 percent. Previously, the company raised the quarterly cash dividend from $0.21 to $0.25. US sales growth was marginal with profit declining slightly.

David C. Novak, Chairman and CEO said, “I’m pleased to report we are raising our full year EPS growth forecast to 14%, which will make 2010 the 9th consecutive year we meet or exceed our annual target of at least 10%”.

The company has a market cap of about $22B and revenues of about $11B.

Yum! Brands Inc (NYSE: YUM)

Comments: The stock fell slightly in after hours trading after following the earnings report. During the day, the stock reached a record high of $47.50. The strong uptrend that began in early February looks likely to continue for YUM although the technicals show some price weakness may emerge for the short term. Despite the high debt burden the company shoulders as it expands, the solid performance the company is showing during its growth phase should help to ensure even stronger performance in the future as the company morphs into a cash cow from its international businesses.