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Why Yum China Holdings, Inc. Stock Rose 25.4% in April

By Steve Symington - Updated May 4, 2017 at 3:08PM

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The Chinese fast-food leader started 2017 on a high note.

What happened

Shares of Yum China Holdings Inc. (YUMC -0.29%) rose 25.4% in the month of April, according to data provided by S&P Global Market Intelligence, after the fast-food specialist delivered better-than-expected first-quarter 2017 results.

So what

Yum China stock popped more than 9% the day after that report. In it, Yum China confirmed that quarterly revenue declined 1.5% year over year to $1.284 billion -- above the $1.27 billion investors were expecting -- and would have risen 4% if it weren't for foreign currency translation. Same-store sales climbed 1% during the quarter, including growth of 1% at KFC and 2% at Pizza Hut Casual dining. On the bottom line, net income climbed 21% year over year, to $175 million, and earnings per diluted share jumped 12%, to $0.44, which was also well above estimates for $0.38 per share.

KFC in China

IMAGE SOURCE: YUM! CHINA HOLDINGS

CEO Mickey Pant said this about the quarter:

I am very pleased with our performance in the first quarter of 2017, and at Yum China we are facing the future with increasing confidence. Both KFC and Pizza Hut Casual Dining delivered positive same-store sales in the first quarter of 2017, with KFC successfully lapping a particularly strong year ago performance. In addition to a good sales performance, our new unit builds, restaurant margin and operating profit showed strong improvement.

Now what

Yum China opened 133 new restaurants during the quarter, leaving it with more than 7,600 locations in China (as of the end of February) and on track to meet its goal of opening a total of 550 to 600 new restaurants for all of 2017. In addition, the company reiterated its target of achieving double-digit percentage growth in operating profit (excluding foreign exchange) for the year.

In the end, this was a strong report from Yum China as it steadily expands its presence in world's most populous country. Considering shares were up only slightly year to date in the days leading up its report, it was no surprise to see the market bidding up Yum China stock last month in response.

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