Wall Street Watch Wednesday: Yum! Brands Is Delicious


Things are getting tastier at Yum! Brands (YUM).

The company behind Taco Bell, Pizza Hut, and KFC posted strong quarterly results after Tuesday's market close.

Revenue climbed 9% to $3.6 billion. Improving restaurant margins and stock buybacks helped push adjusted earnings per share 19% higher. China was once again a major part of the Yum! Brands story, as the world's most populous nation continues to take to the more than 4,000 KFC locations there.

The news was also encouraging closer to home, as same-store sales in the U.S. grew 7% at Taco Bell, 6% at Pizza Hut, and 4% at KFC.

It isn't a surprise to see Taco Bell doing so well. Buzz for the chain has been building since the springtime launch of tacos served in Doritos-dusted shells and the summertime rollout of the slightly more upscale Cantina Bell menu. However, it's also refreshing to see positive comps at Pizza Hut and KFC.

Yum! Brands is now boosting its guidance for the entire year. The fast food master now sees earnings per share growing by at least 13% this year. As long as China keeps snapping up its fried chicken, and stateside hunger pangs are satisfied by its Doritos Locos tacos, Yum! Brands will keep serving up tasty results.

Other Things Worth Watching

Major financial institutions were deemed "too big to fail" during the banking crisis, but are they too big to defraud? The U.S. Attorney for the Southern District of New York initiated a civil lawsuit against Wells Fargo (WFC) on Tuesday afternoon, arguing that deficient practices and a bonus program that encouraged loan officers to value quantity over quality in their mortgages played a part in the subprime meltdown. Wells Fargo denied mortgage fraud allegations after Tuesday's market close.

Alcoa (AA) joined Yum! Brands in kicking off earnings season on Tuesday afternoon. The aluminum producer also rolled out impressive results. Alcoa's adjusted profit of $0.03 a share may not seem like much, and it's far less than what it reported a year earlier. However, Wall Street was braced for merely breakeven results. Alcoa's revenue of $5.8 billion also bested the $5.5 billion that the market was targeting.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Wells Fargo. Motley Fool newsletter services have recommended buying shares of Wells Fargo.

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