Yum Brands (YUM) is beating the broader market on strong first-quarter results. The company delivered an upside surprise of 20% on first-quarter earnings. Analysts remain bullish on Yum’s earnings for this year.

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.

Growth in the First Quarter

The company recently posted robust results Incorporatedluding first-quarter earnings of 48 cents per share, excluding items. The result topped the year-prior 42 cents and exceeded Street expectations by 20%.

Yum saw worldwide sales growth of 1% Incorporatedluding 2% growth in mainland China, which offset weaker U.S. sales.

Management said the power of Yum’s global portfolio allowed the company overcome a challenging environment by accelerating productivity and managing costs while continuing to drive and invest in global growth strategies.
Yum issued a full-year earnings guidance of $2.10 per share, which represents 10% over last year. Analysts are in agreement, pegging 2010 earnings 11% higher at $2.34. The most accurate estimates are higher at $2.11 for 2009 and $2.35 for 2010.

Solid Income

YUM continues reward shareholder with income. The company is a dividend leader among its industry peers, offering an annual dividend of 76 cents per share, which translates into a yield of 2%. YUM nearly quadrupled its quarterly dividend since the initiation of dividends in May 2004.

Zacks Investment Research
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