Yum! Brands Misses Q3 Estimates, Shares Dip

Shares of

dropped more than 18 percent in after-hours trading after the company reported weaker-than-expected earnings for the third quarter. The Louisville, Kentucky-based company posted quarterly net income of $421 million, or $0.95 per share, compared to $404 million, or $0.89 per share, in the year-ago quarter. Excluding special items, the company's earnings rose to $1.00 per share from $0.87 per share. Its total revenue rose to $3.43 billion from $3.35 billion. However, analysts were expecting earnings of $1.07 per share on revenue of $3.68 billion. The average estimate among 46 Estimize users was for earnings of $1.10 per share and revenue of $3.72 billion. China division system sales rose 8 percent for the quarter, while India division system sales dropped 9 percent. KFC division system sales surged 6 percent, while Pizza Hut division system sales rose 2 percent. Taco Bell division system sales surged 7 percent. Same store sales at China climbed 2 percent for the quarter. Worldwide restaurant margin rose 3.3 percentage points to 18.2 percent, while worldwide operating profit climbed 23 percent in the quarter. Year-to-date through October 5, 2015, the company repurchased 4.5 million shares at an average price of $82 per share. Greg Creed, CEO, said "Third-quarter EPS grew 14%. We're pleased same-store sales turned positive and we achieved restaurant margins of nearly 20% in our China business. However, the pace of recovery in our China Division is below our expectations. Outside of China, our Taco Bell and KFC Divisions continued to sustain their positive sales momentum while Pizza Hut was relatively flat. Given our lower full-year expectations in China, combined with additional foreign exchange impact, we now expect 2015 EPS growth to be well below our target of at least 10%." The company's board approved a 12 percent rise in the quarterly dividend to $0.46 per share. Yum Brands shares fell 18.95 percent to $67.64 in the after-hours trading session.