Yum! Brands Beats Wall Street in Q2 but China Division Struggles



Yum beats the street

Yum! Brands’ (YUM) China division continued to negatively affect the company’s profitability in the second quarter. The company reported its Q2 earnings yesterday. Earnings per share (or EPS) excluding one-time items came in at $0.53 compared to $0.73 in the corresponding quarter a year ago. Excluding special items, Yum’s EPS was $0.69 per share, which beat the consensus Wall Street analysts’ estimate of $0.63 per share. Shares were trading $0.22 lower, or 0.24% down, at $91.77 after market hours yesterday.

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Series overview

In this series, we’ll look at the latest earnings update and key metrics such as same-store sales growth for Yum! Brands’ key divisions. We’ll also look at how the recent quarterly earnings affect Yum and what this means for investors.

About Yum! Brands

Yum! operates fast food restaurants under three famous brands—Taco Bell, KFC (Kentucky Fried Chicken), and Pizza Hut. The company also has two less-known brands—the Little Sheep and East Dawning—in China. Yum! Brands operates more than 41,000 restaurants in over 125 countries.

According to IBISWorld, in 2014, Yum! Brands had the second-largest market share of 11%in the US fast food industry. Its share followed McDonald’s (MCD). McDonald’s had the largest share, at 17%. Both these restaurants are included in the Consumer Discretionary Select Sector SPDR Fund (XLY). The ETF holds ~4% of McDonald’s, 3% of Starbucks (SBUX), 1.5% of Yum! Brands, and 1% of Chipotle (CMG).


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