This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Yum! Brands (YUM) Earnings: Wall Street's Take

NEW YORK (TheStreet) -- Yum! Brands (YUM) was rallying on Tuesday after reporting better-than-expected earnings a day earlier

By early afternoon, shares had spiked 8.6% to $71.85.

The owner of KFC and Pizza Hut reported fourth-quarter net income of 86 cents a share, six cents more than Thomson Reuters consensus. Revenue edged 0.5% higher year-over-year to $4.17 billion, but fell short by $79 million.

Sales in the company's China division were lower on the effects of a December 2012 avian flu scare. Quarterly same-store sales in China fell 4%, in line with expectations from Consensus Metrix. Over the year, same-store sales in China fell 13%.

In its U.S. Division, quarterly same-store sales fell 2%, which included declines of 4% at Pizza Hut and 5% at KFC, offset by 1% growth at Taco Bell. Analysts expected 1.6% same-store sales across the portfolio, made up of 2.8% growth at Taco Bell, 2.4% growth at Pizza Hut and a 1.4% drop at KFC.

Excluding currency exchange fluctuations, worldwide system sales grew 2%, which included 5% growth at Yum! Restaurants International (YRI) and 1% at U.S. stores. System sales declined 4% in China.

Here's what Wall Street analysts have to say about the fast food operator's performance:

UBS reiterated a "buy" rating with an $85 price target.

"While significant China sales uncertainty remains a cloud, upside to China CRMs and op profits coupled with YRI to more than offset some modest shortfall in the U.S-Net op profits beat us by $0.01 consensus by $0.04. EPS beat us/cons by $0.04/$0.06. With less deleverage in 4Q and a reiteration of 2014 EPS guidance for at least 20%, we believe some of the fears behind the recent share price declines can abate," wrote analyst Keith Siegner in the report.

"We believe 2013 triggered the implementation of a true cost containment/efficiency program that can help YUM China run leaner into a sales recovery and drive upside to consensus."

Oppenheimer reiterated an "outperform" and set a price target of $80. The investment firm said margin improvements could drive 2014 earnings upside.

"Our primary takeaway from better than expected 4Q results is impressive margin management in China. We believe the Street mis-models restaurant margin expansion in '14, and therefore we envision an EPS upside opportunity," analysts said.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs