YUM! BRANDS INC. $69 - New York symbol YUM

YUM! BRANDS INC. $69 (New York symbol YUM; Aggressive Growth Portfolio; Consumer sector; Shares outstanding: 437.5 million; Market cap: $30.2 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.4%; TSINetwork Rating: Above Average; www.yum.com) earned $404 million in the three months ended September 6, 2014, up 165.8% from $152 million a year earlier. Per-share earnings rose 169.7%, to $0.89 from $0.33, on fewer shares outstanding.

If you disregard unusual items, including last year’s writedown of Yum’s investment in the Little Sheep restaurant chain in China, earnings rose 2.4%, to $0.87 a share from $0.85.

Sales declined 3.2%, to $3.35 billion from $3.5 billion. That’s mainly because a food-safety scare has cut traffic at Yum’s KFC outlets in China. As a result, the China division’s same-store sales fell 14%. However, same-store sales rose 3% at the company’s other KFC locations and 3% at Taco Bell. Same-store sales also rose 4% at the India division, while Pizza Hut saw a 1% decline.

The company will probably earn $3.68 a share in 2014, and the stock trades at a somewhat high 18.8 times that estimate. Yum expects its Chinese sales to rebound in 2015, which could increase its earnings to $3.95 a share. The stock trades at a more reasonable 17.5 times that forecast.

Yum Brands is a hold.

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