Yum! Brands’ stock climbs after Q3 results top expectations

Yum! Brands Inc.’s (YUM) shares climbed around 3% in premarket hours on Wednesday after the company reported sales and profits that beat market expectations for the third quarter of 2018.

Total revenues fell 3% to $1.39 billion versus the same period last year, but came ahead of the market estimate of $1.38 billion.

Net income grew 9% to $454 million during the quarter. On a GAAP basis, diluted EPS grew 18% to $1.40 and on an adjusted basis, EPS grew 52% to $1.04. Analysts had projected adjusted EPS at $0.84.

Greg Creed, CEO, said, “We are pleased to deliver third-quarter system sales growth of 5%, consisting of same store sales growth of 2% and net new unit growth of 4%. Core operating profit growth of 2% was consistent with our expectations. We are now two years into our three year transformation and remain firmly on-track to becoming more focused, more franchised and more efficient. The collective power of our three iconic brands, anchored by our four key growth drivers, is helping us deliver long-term sustainable growth and higher returns for our stakeholders.”

Bleak comp sales adulterate Yum! Brands’ Q2 earnings beat as stock drops

The company posted revenue increases at its Taco Bell and Pizza Hut divisions while the KFC unit saw a decline. Worldwide system sales, excluding foreign currency translation, grew 5%, with Taco Bell at 8%, KFC at 7% and Pizza Hut flat. Same-store sales grew 2% on a consolidated basis, with Taco Bell and KFC posting increases of 5% and 3%, respectively, while Pizza Hut saw a decline of 1%.

Yum! Brands opened 410 net new units for 4% net new unit growth. The company refranchised 134 restaurants for pre-tax proceeds of $193 million. These include 57 KFC units, 31 Pizza Hut units and 46 Taco Bell units.

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