For the quarter, YUM! Brands posted earnings of 86 cents a share, beating analyst estimates. Analysts polled by Thomson Reuters estimated earnings of 80 cents a share for the quarter. YUM! Brands reported revenue of $4.18 million, compared to analyst estimates of $4.26 million.
Despite beating earning, the owner of KFC, Taco Bell, and Pizza hut reported poor same-store sales in the quarter. In the U.S. same-store sales fell 4% at Pizza Hut and 5% at KFC. Taco Bell saw 1% growth in same-store sales in the quarter.
TheStreet Ratings team rates YUM BRANDS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate YUM BRANDS INC (YUM) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- In its most recent trading session, YUM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, YUM BRANDS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- YUM BRANDS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, YUM BRANDS INC increased its bottom line by earning $3.37 versus $2.74 in the prior year. For the next year, the market is expecting a contraction of 13.9% in earnings ($2.90 versus $3.37).
- Net operating cash flow has declined marginally to $824.00 million or 7.82% when compared to the same quarter last year. Despite a decrease in cash flow of 7.82%, YUM BRANDS INC is still significantly exceeding the industry average of -104.50%.
- You can view the full analysis from the report here: YUM Ratings Report