Yum! Brands Earnings: Revenues Not Tasty Enough for Investors

Yum! Brands, Inc. (NYSE:YUM) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 5.30%.

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Yum! Brands, Inc. Earnings Cheat Sheet

Results: Net income decreased -5.34% to $337 million (83 cents per diluted share) in the quarter versus a net gain of $356 million in the year-earlier quarter.

Revenue: Decreased 12.67% to $3.59 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Yum! Brands, Inc. reported adjusted net income of 83 cents per share. By that measure, the company beat the mean analyst estimate of $0.82. It missed the average revenue estimate of $4.12 billion.

Quoting Management:

David C. Novak, Chairman and CEO, said, “We delivered full-year 2012 EPS growth of 13% or $3.25 per share, excluding Special Items. This marks the 11th consecutive year we delivered at least 13% growth, which puts us in an elite group of high-growth companies. We also take satisfaction with our record level of international development in 2012 which lays the foundation for future growth and makes Yum! a leader in emerging market development. With new-unit development at the core of our growth model and the continued rapid expansion of the consuming class overseas, we believe our opportunity for long-term growth has never been better…

…We are obviously proud of our track record of achieving double-digit EPS growth, and I am as confident as ever we can deliver this performance over the long term. However, as a result of adverse publicity from the poultry supply situation in mid-December, China KFC sales experienced a sharp decline. Due to continued negative same-store sales and our assumption that it will take time to recover consumer confidence, we no longer expect to achieve EPS growth in 2013.

Key Stats:

Revenue increased 0.59% from $3.57 billion in the previous quarter. Net income decreased 28.45% from $471 million in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.89 to a profit $0.79. For the current year, the average estimate has moved down from a profit of $3.28 to a profit of $3.24 over the last ninety days.

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(Company fundamentals provided by Xignite Financials.)