Yum! Brands YUM shares sold off Wednesday following a top line miss. Although earnings were not as strong as Wall Street had hoped, Chinese and Indian sales climbed by 21 percent and 18 percent compared to the same period last year.
Focused on international numbers, Morgan Stanley analyst John Glass gave his thoughts on the report.
“China delivered on both sales and margins, an important harbinger for future quarters as China began to lap margin initiatives… Results validate significant margin improvement potential as YUM unwinds built up labor and other inefficiencies in China.”
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Glass also explained how the region can contribute to financial figures, “If food inflation remains tame in China, it’s enough to drive EPS upside for the balance of the year. These results also give reason to believe that 20% restaurant margin is within reach in the next few years.”
Shares of Yum! Brands were last down 2.7 percent to $80.45.
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