Earnings Preview: Yum Brands

Yum! Brands (YUM) is expected to report Q2 earnings after market close on Wednesday, July 16, with a conference call scheduled for Thursday at 9:15 am ET.

Guidance

Analysts are looking for a profit of 42c on revenue of $2.55B. The consensus range is 40c to 43c for EPS, and revenue of $2.46B to $2.6B, according to First Call.

In April, Yum! raised its FY08 EPS view to $1.87 from $1.85 vs. First Call consensus of $1.89.

Analyst Views

In a July 10 note, Buckingham said that Yum! has a track record of upside surprising; besides a tough sales & cost environment, upside will likely be limited due to 4c to 5c of headwinds. Buckingham highlighted the lapping of an usually low tax rate and insurance reversals, as well as the elimination of the Mexican VAT exemption. Full year guidance is safe and the international story "has legs," Buckingham contended.

Wachovia expects that restaurants with greater exposure to lower income consumers should benefit from the fiscal stimulus plan. Specifically the firm said, quick-service restaurants with heavy concentrations in area hit hardest by the economic slowdown, like California and the Midwest, should perform the best.

In May, Yum! raised its quarterly dividend by 27% to 19c per share from 15c. Next event: Yum! Brands will report Q3 earnings on October 7, after the market closes. :thefly