) --

Yum! Brands

(YUM) - Get Yum! Brands, Inc. (YUM) Report

beat Wall Street expectations for its second-quarter results Wednesday on strong sales growth in China.

Yum!, the operator of Taco Bell, KFC and Pizza Hut restaurant chains, said same-store sales -- or sales at stores open at least one year, a closely watched metric in the restaurant industry -- grew 18% in China but fell 4% in the U.S. Analysts had expected the key line item to grow 11% in China and to fall 1.6% in the U.S.

Yum!'s stock traded heavily ahead of its report. Nearly 5.3 million shares changed hands in Wednesday's session, compared with their average daily volume of just 3.5 million. The stock closed higher by 1.1% at $55.58, and gained another 3.4% in after-hours trading.

>> Bankruptcy Watch: 14 Risky Restaurant Stocks

After-hours gains also came as a result of Yum! lifting its full-year profit growth forecast "to at least 12% based on the continued strength of our international businesses," CEO David C. Novak said. That would translate to earnings of at least $2.83 a share, excluding items, for the year. That's in line with the current average analysts' view, according to

Thomson Reuters


Yum! booked a 10.5% jump in second-quarter earnings to $316 million, or 65 cents per share, compared with year-earlier earnings of $286 million, or 59 cents a share. Total revenue rose 9.7% to $2.82 billion from $2.57 billion a year ago.

>>Yum!'s Taco Bell 'Meat' Prompts Lawsuit

Analysts were expecting Yum! to earn $293.3 million, or 61 cents per share, on revenue of $2.7 billion.

Earlier this month, analysts at Goldman Sachs downgraded Yum! shares to sell, citing uncertainty in the restaurant company's China market, as well as weakness with Taco Bell.

"Given Chinaâ¿¿s current monetary tightening cycle and historical correlations, we believe YUMâ¿¿s China

same-store sales may decelerate in the back half of the year," the analysts noted, adding that the recent fallout over Taco Bell's beef lawsuit continues to linger in Americans' minds.

>> Consumer Products You Pay More For

In an effort to draw more customers,

Taco Bell said earlier this month it will offer free Wi-Fi at all of its U.S. restaurants by 2015

in a move that echoes that of restaurant giants


(MCD) - Get McDonald's Corporation (MCD) Report



(SBUX) - Get Starbucks Corporation Report

. Just 40 Taco Bell restaurants offer the complimentary service now.

The fast-food chain will also outfit its stores with TV screens airing programs from Restaurant Entertainment Network, a content providing service already employed by

TheStreet Recommends


(DENN) - Get Denny's Corporation Report

, Arby's,


(WEN) - Get Wendy's Company Report

, Carl's Jr and Hardee's, according to a report in

The Independent

. Programs will feature content on music, lifestyle, entertainment and sports.

>>15 Food Companies That Serve You 'Wood'

Deutsche Bank analysts had a hold rating on Yum! shares, and said it expects comps to fall around 1.3% in the U.S., with steeper drops at Taco Bell following the now-dropped lawsuit.

The firm expected comps in China to rise 9% in the quarter but "even with very strong comps, we are expecting high food and labor inflation to continue to weigh on China margins."


Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here:

Miriam Reimer


>To follow the writer on Twitter, go to



>To submit a news tip, send an email to:




>> Don't Buy Dunkin' Donuts IPO: Value Analyst

>> Bankruptcy Watch: 14 Risky Restaurant Stocks

>> Consumer Dividend Stocks Increasing Payouts

>> 14 REITs Increasing Dividends Annually

>> Taco Bell to Offer Free Wi-Fi by 2015

>> Starbucks to Grow Grocery Business Tenfold

>>See our new stock quote page.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.