Yum! Brands Inc. (NYSE:YUM), a global quick service restaurants company yesterday reported their second-quarter 2016 financial results. Yum reported second quarter earnings of $0.75 per share which beat analyst expectations of $0.74 per share. Yum reported second quarter revenues decreased 3% year over year to $3.01 billion which fell short of analyst expectations of $3.09 billion.
YUM! Brands, Inc. CEO’s Comments
Greg Creed, CEO, said:
Yum! Brands (NYSE:YUM) delivered second-quarter core operating profit growth of 7% and EPS growth, excluding Special Items, of 9%. Given our strong first-half results and current trends in China, I’m pleased to raise our full-year core operating profit growth forecast to at least 14% from 12% previously. I’m particularly pleased with the continued sales momentum at KFC China, which delivered better-than-expected same-store sales growth of 3%. This represents our fourth-consecutive quarter of positive same-store sales growth at KFC China despite the second quarter being our most difficult of the year from a historical sales overlap standpoint. Importantly, our China Division is off to a good start in the third quarter for both KFC and Pizza Hut Casual Dining, including a return to positive same-store sales at Pizza Hut Casual Dining in recent weeks.
Outside of China, challenging industry conditions in the U.S. contributed to soft sales results. However, our three brand divisions in the aggregate delivered core operating profit growth largely in-line with our expectations and remain on track to deliver against their full-year core operating profit growth targets. We’re confident in our plans to drive second-half sales improvement led by a continued focus on innovation, value and our core products.
This is a transformational year for our company as we remain on track to finalize the separation of our China business with a targeted completion date around October 31, 2016, ultimately creating two powerful, independent, focused growth companies. Our capital structure is fully in place and we plan to return a significant amount of capital to shareholders both prior to and after the spin. I look forward to sharing additional details on the transformative initiatives we are undertaking as we become a more heavily franchised company at our New York investor conference on Tuesday, October 11th. Business Wire
YUM Technical Analysis
YUM opened trading yesterday at $85.65 which was down from the previous days trading of $85.77. YUM closed trading yesterday at $85.74 and spiked up after market to $89.60, equivalent to a 5% increase from the closing price. Taking a look at the daily chart we can see the last time YUM traded above these levels was on August 6th, 2015 when it traded at highs of $89.67. Taking a closer look at the daily chart we can see that YUM has been on an overall upward trend dating back to February 11th when it traded at its 52 week low price of $64.58. YUM has a float of 364.16 million shares and traded 1.80 times the normal daily trading volume on Wednesday. For trading purposes, I would like to see YUM open trading on Thursday above $88.30 and if it does I would be looking to take a long position at the bell. My stop loss would be $0.30 from my entry position fearing anything more than that and the stock would start to fill in the gap up.
Company Profile
YUM! Brands, Inc., through its subsidiaries, operates quick service restaurants. It operates in four segments: YUM China, the KFC Division, the Pizza Hut Division, and the Taco Bell Division. The company develops, operates, franchises, and licenses a system of restaurants, which prepare, package, and sell various food items. As of April 21, 2016, it operated approximately 43,000 restaurants in approximately 130 countries and territories primarily under the KFC, Pizza Hut, and Taco Bell brands, which specialize in chicken, pizza, and Mexican-style food categories. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to YUM! Brands, Inc. in May 2002. YUM! Brands, Inc. was founded in 1997 and is headquartered in Louisville, Kentucky.