YUM! Brands Earnings: Net Income RISES, Short of Estimates

S&P 500 (NYSE:SPY) component YUM! Brands Inc. (NYSE:YUM) reported its results for the second 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 $331 million (69 cents per share) vs. $316 million (65 cents per share) in the same quarter a year earlier. This marks a rise of 4.7% from the year-earlier quarter.

Revenue: Rose 12.5% to $3.17 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: YUM! Brands Inc. reported adjusted net income of 67 cents per share. By that measure, the company fell short of mean estimate of 70 cents per share. Analysts were expecting revenue of $3.12 billion.

Quoting Management: David C. Novak, Chairman and CEO, said, “I’m pleased to report we generated strong system sales growth in each of our divisions in the second quarter, with robust new-unit development and exceptional same-store sales growth. Operating profit increased 8% while EPS growth of 1% was negatively impacted, as expected, by a higher tax rate versus last year. Our U.S. business increased operating profit 26% in the second quarter and drove our overall operating profit growth. We expect China and Yum! Restaurants International (YRI) to drive our second-half profit growth. Based on our first-half results and current solid sales trends, we reconfirm our full-year guidance of at least 12% EPS growth, excluding special items.”

Key Stats:

The company has now seen its net income rise for three quarters in a row. In the first quarter, net income rose 73.5% and in the fourth quarter of the last fiscal year, the figure rose 29.9%.

Revenue has increased for four quarters in a row. Revenue increased 13.1% to $2.74 billion in the first quarter. The figure rose 15.4% in the fourth quarter of the last fiscal year from the year earlier and climbed 14.4% in the third quarter of the last fiscal year from the year-ago quarter.

After beating analyst estimates for the two previous quarters, the company fell short of forecasts. In the first quarter, it topped the mark by 3 cents, and in the fourth quarter of the last fiscal year, it was ahead by one cent.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the third quarter has moved up from 98 cents a share to 99 cents over the last seven days. The average estimate for the fiscal year is $3.31 per share, a rise from $3.28 ninety days ago.

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

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