Earnings Preview: Yum! Brands

Yum! Brands (YUM) is expected to report Q2 earnings after the market close on Tuesday, July 14, and with a conference call scheduled for Wednesday at 9:15 am ET.

Guidance

Analysts are looking for a profit of 44c on revenue of $2.5B. The consensus range is 38c-46c for EPS, and revenue of $2.45B-$2.58B, according to First Call. In April the company said it was targeting 10% EPS growth for FY09. The Kentucky Fried Chicken Japan unit projected a consolidated net profit of 2.1B yen for FY09 on a strong takeout business, up 900M yen from its earlier forecast, the Nikkei recently reported.

Analyst Views

On July 1 Goldman Sachs upgraded shares of Yum!, which recently announced a marketing partnership between Taco Bell and the NBA, on expectations business in the U.S. and China will improve in 2H09. Goldman raised its rating to Buy from Neutral and its target to $40 from $36. The firm said it's also positive on overall corporate margins and prospects for Yum! Restaurants International profit growth. RBC Capital analyst Larry Miller believes the quarter will be a "pretty high-quality quarter." He says that "things are going okay in the U.S.," and thinks things are "going a little bit better than planned in China." Analysts and investors will listen for comments from Yum! regarding performance at its U.S. operations, as an improvement may signal an improving economy.