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LOUISVILLE — Yum Brands Inc. reports earnings for the fiscal second quarter on Tuesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Yum Brands, operator of the Pizza Hut, Taco Bell and KFC chains, has had mixed results as the stronger dollar cut into overseas revenue while costs in its U.S. operations moderated as commodity prices eased. The fast-food company has benefited from customers seeking cheaper alternatives to sit-down restaurants, but the weak economy has hampered dinner business at Pizza Hut and KFC.
The company said in the spring that its second-quarter results will likely be the "low point" of the year, it has predicted 10 percent growth in earnings per share for the year.
Yum has laid out ambitious plans for overseas expansion, led by its highly profitable China operations, where KFC is popular. The company plans to continue a fast pace of openings in China.
To bolster its sluggish performance in the U.S., KFC rolled out its Kentucky Grilled Chicken nationwide in the spring, backed by a marketing blitz.
BY THE NUMBERS: Yum has not offered specific guidance for the quarter, but a company spokesman said in April that the company expected a "challenging" quarter. Analysts polled by Thomson Reuters, on average, expect profit of 43 cents per share on revenue of $2.5 billion.
ANALYST TAKE: Morgan Stanley analyst John Glass said in a note to investors in the spring that lower commodity costs could provide a "buffer to softer-than-expected sales in the U.S. and China" and put Yum's 10 percent growth projection for the year "well within reach."
Similarly, J.P. Morgan analyst John Ivankoe said in a note last month that lower costs and interest expenses than expected softened the blow of slower-than-expected sales in the U.S. and China.
WHAT'S AHEAD: Yum expects its earnings per share to rise in 2009 by 10 percent, largely due to sales and profit growth in China.
STOCK PERFORMANCE: Yum shares closed Friday at $34.98, 10.8 percent below their 52-week high of $39.23, reached in September. The low for the period was $22.25 on Nov. 20.
