Yum! Brands' Problem Isn't Just KFC in China

Yum! Brands' Problem Isn't Just KFC in China

Yum! Brands' recent struggles go deeper than just the Chinese portion of its KFC portfolio. In the video below, Fool contributor Demitrios Kalogeropoulos says that Yum!'s latest business results included two other bad surprises for investors.

First, the company took a huge writedown on its Little Sheep investment in China, which cleaved 55 percentage points off its earnings this quarter. Also, KFC sales turned sharply lower in the U.S., flipping from 3% growth last quarter to negative 4% growth this time. That loss swamped the small gain that Yum! saw from its improving Taco Bell business, Demitrios says. Overall, weak profits from the U.S. could make it hard for Yum! to hit the roughly 15% earnings dip that it is targeting for all of 2013, he argues.

International growth is key
Still, there's no doubt that overseas profits will be key to the company's future. The Motley Fool's free report, "3 American Companies Set to Dominate the World," shows you how to profit from a few of the U.S. businesses that, like Yum! Brands, are well positioned to grab market share overseas. Click here to get your free copy before it's gone.

The article Yum! Brands' Problem Isn't Just KFC in China originally appeared on Fool.com.

Fool contributor Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Originally published