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Here Is Why Yum! Brands Just "Beat" Earnings

Tyler Durden's picture


On Monday it was Alcoa, now it is Yum! Brands' turn. The food company, best known for its KFC mystery meat, and over-reliance on a suddenly careening China just reported results which were mixed. Revenue of $2.904 billion was less than the expected $2.92 billion and was 8% lower than the $3.2 billion reported a year ago. Operating profit excluding refranchising gains and losses was $358MM, below expectations of $375MM, leading to a EBIT margin of 12.5% also substantially less than the 14.5% reported a year ago. In short, worldwide operating profit crashed 20% including a 63% drop in China. But thanks to various below the line adjustments, including a tax rate of 22.1% or lower compared to the 23.9% a year ago, the company's EPS of $0.56 beat expectations of $0.54.

So all is well right and the stock is justified to be up after hours, right?

Well, here is a chart showing the company's stock price (black line) and the change in the sellside consensus forecast for Q2 EPS (red line) which today was $0.54. Two months ago it was $0.75... when the stock was trading $10 lower.

Efficient markets indeed.

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Wed, 07/10/2013 - 16:48 | 3738943 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

Top line is most important at this point, less opportunity to manipulate the numbers.  My guess is this will be the trend, weak top line numbers and bullshit the rest.

Wed, 07/10/2013 - 16:50 | 3738969 Divided States ...
Divided States of America's picture

Its obvious the entire Wall street is also in this game of depicting that everything is fine and we should just load up on stocks. Them and the Fed are working in unison to hose everyone else.

Wow, Bernanke says highly accomodative monetary policy needed for foreseeable future?? I mean if giving free money to banks in the trillions aint accomodative, then what, now we also have to suck off Jamie Dimon and Lord Blankfiend so they can feel like they are above God?

Wed, 07/10/2013 - 16:56 | 3738995 Spider
Spider's picture

Perfect reason why Bernanke cant stop QE - as soon as the free-money stops coming YUM isnt going to be able to hold up with a 36 PE

Wed, 07/10/2013 - 17:04 | 3739016 ACP
ACP's picture

Earnings lowered-to-beat (LTB)...been happening forever...but now with the Fed's unlimited funds, they'll just bang the stock whatever direction has the most stops, then after a day go back to the usual daily ramp.

I remember before March 2009, LTB didn't work quite as well, without unlimited funds.

Wed, 07/10/2013 - 17:14 | 3739049 Sofa King Confused
Sofa King Confused's picture

I ATE THE BONES !!!!!!!!!

Wed, 07/10/2013 - 18:07 | 3739209 venturen
venturen's picture

That is what Maria said!

Wed, 07/10/2013 - 17:00 | 3739006 Cdad
Cdad's picture

Of course...the failed status quo on Wall Street [and in DC] continue to try to fool the world that the US economy is a rockin'.   Of course, it isn't.  

In DC, they perpetuate entirely manipulated employment data, ignoring the labor participation rate, or that part time waiters made up the bulk of the last "great employment report", and that a temp agency has become the nation's second largest employer.

And the Bernankster continues to print and print money, placing it strategically in big dead banks...because if he didn't, the market would collapse once again....because average Joe will have nothing to do with Wall Street anymore.

It's all about propping up the failed status quo...rather than the logical course of shedding it for its obvious failures.

Prosecute the bankers, let deflation take its due course, deflate the market, take the pain, quit printing money, close the FED, shrink DC by half...and then we can actually have a real recovery. And freedom again, as well.


Wed, 07/10/2013 - 17:07 | 3739023 RockyRacoon
RockyRacoon's picture

It is said that at some point dollars will come flooding back into the U.S. from the rest of the world.  Could general market action like this be an indicator of same?  If so, this is going to one helluva stock market bubble coming up.  Housing ain't gonna revive, so why not.

Wed, 07/10/2013 - 17:33 | 3739122 Son of Loki
Son of Loki's picture

Who needs revenue? You just need "good" accountants.

Wed, 07/10/2013 - 16:46 | 3738944 Pairadimes
Pairadimes's picture

Apparently, people have already started to eat their iPads.

Wed, 07/10/2013 - 17:40 | 3739136 Freddie
Freddie's picture

iPads would probably be healthier than Taco Bell (Yun Brands house of dog food).

Wed, 07/10/2013 - 16:46 | 3738947 slaughterer
slaughterer's picture

Another case of "Lower the bar.  Stumble over it."  

Wed, 07/10/2013 - 16:57 | 3738997 Uber Vandal
Uber Vandal's picture

Soon, the bar will just be a stripe painted on the pavement, then it will be below grade.

Estimated earnings were -1.00 per share, we came in at 0.00000, HUGE WIN!!

Wed, 07/10/2013 - 18:31 | 3739283 Cursive
Cursive's picture

@Uber Vandal

LOL. This has ALREADY happend to ZNGA.

Wed, 07/10/2013 - 18:57 | 3739382 unununium
unununium's picture

AMZN used to shoot up when its LOSS INCREASED LESS than EXPECTED.

Wed, 07/10/2013 - 16:46 | 3738948 chubbyjjfong
chubbyjjfong's picture

Bullish never tasted so good!  

Wed, 07/10/2013 - 16:48 | 3738959 EmmittFitzhume
EmmittFitzhume's picture

The government approves of cooking the books now, so this is good!

Wed, 07/10/2013 - 16:49 | 3738964 timbo_em
timbo_em's picture

Benny has to print MOAR so that they can buy back MOAR (capex is so Old Normal) so that EPS can be shiny forever and ever and the sheeple keep believing while CNBC keeps saying that stawks are cheap.

Wed, 07/10/2013 - 16:50 | 3738972 McMolotov
McMolotov's picture

Not surprising in a nation where college kids have to take remedial math and reading courses.

Wed, 07/10/2013 - 16:52 | 3738976 francis_sawyer
francis_sawyer's picture

Remember those dead floating pigs in China's rivers?



Wed, 07/10/2013 - 16:52 | 3738977 Seasmoke
Seasmoke's picture

Work backwards until you get the results you want. 

Wed, 07/10/2013 - 16:58 | 3738999 prains
prains's picture

What is the point anymore?

Wed, 07/10/2013 - 17:02 | 3739014 TrustWho
TrustWho's picture

Well done, the talking heads (TH) think the muppets are stupid; this chart relative to TH talking points demostrates TH stupidity. However, the market agrees with the TH folks. I use to think the market reflected the best logical thinking with short term emotional momentum. The market is stupid too!

Wed, 07/10/2013 - 17:07 | 3739026 John Bigboote
John Bigboote's picture

This phenomenon has been going on since 2008. Nobody wants to admit to their manager that things suck and it's over. Then the manager does the same to his/her manager and on and on up the chain (including accounting departments and CEOs). This will continue until the whole thing collapses all at once and when it is safe to admit that things obviously suck and it's not just you. Currently, there is a significant risk of being fired for "not being a team player and for being negative". After all, "if you don't believe that revenue can be generated out there, then we will find someone who does". Everyone is lying to eachother and making shit up and blowing their forecasts over and over. Revenue cannot be forecasted anymore. It's a total joke.

Wed, 07/10/2013 - 17:09 | 3739034 ParkAveFlasher
ParkAveFlasher's picture

The Rastafari aliens are the good guys!

Wed, 07/10/2013 - 17:17 | 3739054 John Bigboote
John Bigboote's picture

Makes me laugh!

Wed, 07/10/2013 - 17:40 | 3739134 ZerOhead
ZerOhead's picture

You Bastard!!!... next time kindly preface your remarks with...


Wed, 07/10/2013 - 17:07 | 3739027 q99x2
q99x2's picture

Got to start making charts from the perspective of an Algorithm. An algo can't eat an eps. or a revenuer but it can eat an electron so you need charts relevant to what is behind the algos motivation. Your point is fact so who is going to begin the solution? Not I said the pig. Not I said the sheep. Not I said the turkey that voted for Thanksgiving.

Wed, 07/10/2013 - 17:27 | 3739097 adr
adr's picture

Billy, when you started the semester we had high hopes, straight A's actually. Then we learned about situations out of your control, getting that hard professor. So we lowered our expectations. Then you broke up with your girlfriend, how can we expect you to study. So of course we lowered the bar again.

We got your report card today. Wow, 56%. We are actually so proud. We decided that we would give you a special one time adjustment to modify the bottom line grades. We actually set it at 15%. So your adjusted average is 71%, into the C range. More than we expected. With all you have been through a solid C is amazing. 

To celebrate your accomplishment we bought you a new Corvette to take back to school. Keel up the good work.

Wed, 07/10/2013 - 17:29 | 3739108 Never One Roach
Never One Roach's picture

Excluding all the losses and sinking revenues and stinky food, the company looks pretty good.

Wed, 07/10/2013 - 17:52 | 3739169 Big Ben
Big Ben's picture

Junk "food", junk "earnings".

Wed, 07/10/2013 - 18:14 | 3739228 Quaderratic Probing
Quaderratic Probing's picture

With an inverted EPS chart the algo will see the price consolidating before major lift off.

Bottom line who needs earnings if the Fed is giving you Cap Gains as World dies on the vine.

Mark to Market was not the only real thing to die in 2009

Wed, 07/10/2013 - 18:41 | 3739317 bugs_
bugs_'s picture

Taco Bell survives the restaurant wars.  Strong Buy!

Wed, 07/10/2013 - 18:59 | 3739387 unununium
unununium's picture

The new plan is to get Mrs. Watanabe and the E*Trade baby into a short position then squeeeeeze.

Thu, 07/11/2013 - 06:56 | 3740716 esum
esum's picture

the last and i do mean LAST time my son and i had KFC we both got sick.

they must change the oil every hundred thousand chickens right?

what do they do with the bones

has some creative genius figured out how to serve them up with the fabricated chicken tits... or are they in the mashed potatoes along iwth the flies and maggots

take a good close look at the food service people working / occupying these shitholes and extrapolate their physical demeanor and attitude into a visual of licking taco shells, rancid meat with flies, oil sludge, where have those hands been.. armpit, crotch, ass, nose..and lastly on your boneless bird... now say YUM YUM YUM.... may i have another. Hey mom look, boneless rat (china only) ... i hope 

Thu, 07/11/2013 - 06:56 | 3740717 BurningBetty
BurningBetty's picture

You buy, they buy, she buys, he buys, everyone buys..hey, doesn't matter how bad it gets, as long as we all buy it's all sorted!

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