Yum! Brands, Inc. (YUM) delivered earnings per share that were, on average, 7.6% ahead of consensus estimates over the past 5 straight quarters. Analysts are forecasting 13% growth in earnings for the 2008 year, versus 2007.

Company Description

Yum! Brands is the world’s largest restaurant company in terms of system restaurants with more than 35,000 restaurants in more than 110 countries and territories. Four of YUM’s restaurant brands, KFC, Long John Silver’s, Pizza Hut and Taco Bell, are the global leaders of the chicken, quick-service seafood, pizza and Mexican-style food categories. A&W Restaurants is the longest running quick-service franchise chain in America.

The company, which is based in Louisville, Kentucky, saw more than $10 billion in total revenues in 2007 Incorporatedluding company sales and franchise fees.

Robust Growth

The company recently reported strong third-quarter results. The results included worldwide system-sales growth of 10% and mainland China unit growth of 21%. YUM said its worldwide same-store-sales growth of 3%, marks its 20th consecutive quarter of global same-store-sales growth.

Earnings per share of 58 cents topped the year-prior 50 cents and exceeded the consensus estimate by 7.41%. YUM’s earnings per share have been, on average, about 7.6% ahead of analyst estimates.

“Importantly, the global strength of our business in 2008 is widespread and best demonstrated by sales growth performance for each of our divisions, with the notable exception of the KFC U.S. business. This year’s international expansion continues to be robust as we drive record new unit openings and profits in both China and Yum! Restaurants International (YRI),” said David C. Novak, Chairman and CEO. “In the U.S., Taco Bell and Pizza Hut are both delivering solid same-store-sales and profit growth performance for the full year. Our KFC U.S. business continues to lag the rest of our global portfolio and is the driver of our underperforming profit in the U.S. business, along with unprecedented commodity inflation. We expect to turn around KFC performance in 2009 with the introduction of our successfully-tested Kentucky Grilled Chicken.”

Higher Forecasts

The company continues to expect to generate $1.90 per share.

Analysts have 2008 earnings per share pegged at $1.90, which would represent 13% growth over the year-prior earnings.

Solid Income

In early September, the company declared a dividend 19 cents per share, which followed a previously increased dividend. YUM stated that the dividend will be distributed November 7, 2008, to shareholders of record at the close of business on October 17, 2008.

The company has an excellent history of rewarding shareholders with higher income through its share repurchase program and its quarterly dividend. YUM noted that it remains a leader among global consumer companies in this key measure. The company added that it has nearly quadrupled its quarterly dividend since the initiation of dividends in May 2004.

In 2007, Yum! returned almost $1.7 billion to shareholders Incorporatedluding over $1.4 billion in share repurchases and nearly $275 million in dividends.

As of September 10, 2008, Yum! has already returned over $1.8 billion to shareholders this year through $1.5 billion of share repurchases and over $300 million in dividends Incorporatedluding this dividend declaration.

Content Courtesy: Zacks Investment Research

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1. (YUM) – Yum! Brands – earnings per share have been, on average, about 39% ahead of analyst estimatesYum! Brands, Inc. (YUM) recently declared a quarterly dividend of 19 cents per share. The...
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