YUM! Brands Earnings: Margins Rise with Revenues, Net Income Climbs

S&P 500 (NYSE:SPY) component YUM! Brands Inc. (NYSE:YUM) reported its results for the third quarter. Yum Brands develops, operates, franchises and licenses a system of restaurants.

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YUM! Brands Inc. Earnings Cheat Sheet

Results: Net income for YUM! Brands Inc. rose to $471 million ($1 per share) vs. $383 million (80 cents per share) in the same quarter a year earlier. This marks a rise of 23% from the year-earlier quarter.

Revenue: Rose 9% to $3.57 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: YUM! Brands Inc. beat the mean analyst estimate of 98 cents per share. It beat the average revenue estimate of $3.12 billion.

Quoting Management: David C. Novak, Chairman and CEO, said, “Very strong sales and profit at all of our divisions, including China, Yum! Restaurants International, India and the U.S., drove 19% third-quarter EPS growth. Given the strength of our year-to-date results, I’m pleased to report we are raising our full-year EPS growth forecast to at least 13%, excluding Special Items.”

Key Stats:

The company has now seen its net income rise for three quarters in a row. In the second quarter, net income rose 4.7% and in the first quarter, the figure rose 73.5%.

Revenue has risen for the last four quarters. Revenue increased 12.5% to $3.17 billion in the second quarter. The figure rose 13.1% in the first quarter from the year earlier and climbed 15.4% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company topped expectations last quarter after falling short of forecasts in the second quarter with net income of 67 cents versus a mean estimate of net income of 70 cents per share.

Margins rose in the second quarter after falling the quarter before. Gross margin grew 0.8 percentage point from the year-earlier quarter to 28.7%. In the first quarter, the figure rose 1.2 percentage points to 26.2% from the year earlier quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is 86 cents per share, down from 87 cents ninety days ago. The average estimate for the fiscal year is $3.26 per share, down from $3.32 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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