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Has Yum! Brands Finally Beaten the Bird Flu?

By Mark Reeth and Michael Finarelli – Feb 8, 2014 at 2:30PM

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Is Yum! Brands finally recovering from its avian flu troubles in China, or is this just a bump of better news before Yum! continues to slide?

While same-store sales did fall another 4% in China for Yum! Brands (YUM -1.65%) and its restaurants, operating profit rose in China by 5% as restaurant margins there improved to 14.3%, versus 13.9% a year ago. After the long-term pain Yum! has struggled with in China recently due to concerns about the avian flu and the company's chicken suppliers, many considered this quarterly report to be a success, and management reaffirmed its guidance of at least 20% earnings-per-share growth in 2014. Is this the beginning of the turnaround that Yum! so desperately needs in China, or will this prove to be a fluke amid Yum!'s continuing struggles?

In this video from Thursday's Consumer Countdown, Motley Fool consumer goods analysts Mark Reeth and Mike Finarelli debate the future of Yum!. Mike still believes that the company's headwinds in China will prove to be short term, and sees the markets in China and India to be far from saturated with a lot of growth potential ahead. Mark isn't so sure, and sees much safer players in the food space than Yum!, which still has so many factors related to its menu that are out of its control.

Mark Reeth has no position in any stocks mentioned. Michael Finarelli has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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