Louisville’s Yum! Brands has just posted first quarter earnings showing positive global sales, and Wall Street is dining out on the news. The firm — which includes KFC, Taco Bell and Pizza Hut — saw worldwide sales grow 4 percent, with earnings-per-share, aka EPS, of $0.81 for the first quarter of 2015.
This new quarterly EPS actually was a 7 percent decrease year-over-year. Yum’s total net income for the quarter was $362 million, a 9 percent decrease year-over-year. Total quarterly revenues were $2.6 billion, a 4 percent decrease.
So why are many Wall Street-types considering this good news? Because Yum! is now seen as making positive strides after having been badly hurt by a July 2014 tainted meat scandal in its marquee China market.
The firm’s China division had profit margins of 19 percent, despite same-store sales being down 12 percent year-over-year. The China division saw its total sales decline by 6 percent in the quarter, but this was actually an improvement over the last quarter of 2014, when the China division had an 11 percent sales decline.
Yum! CEO Greg Creed said Yum’s China story was changing.
“We remain on track to open at least 700 new restaurants in China this year with strong returns, laying the groundwork for future growth,” he said in a statement along with the firm’s earnings. Total KFC sales were up 8 percent, with 5 percent same-store sales growth.
Taco Bell was a bright spot for Yum!, with its sales up 9 percent in the quarter, with a 6 percent increase in same-store sales. One driver of this growth? It’s breakfast offerings, which have been a surprise hit. Pizza Hut sales remained at thin-crust level, with sales up 2 percent in the quarter.
Wall Street thought all this news was just bell grande, and Yum’s shares are up 5.3 percent today — and 7 percent over five trading days.
The analysts at investing site Seeking Alpha think Yum’s current story is, in a word, delicious.
“Yum Brands is back on recovery mode with its efficient business strategies and managerial skills,” Seeking Alpha wrote. “Thus, the company is likely to generate double-digit growth in earnings for fiscal 2015 … In fact, the company is poised to make strong growth in the coming days with its expansion strategy.”