I may well be the only person on the planet who has never eaten a McDonald's (NYSE:MCD) Big Mac. Then again, who else besides me needs to visit three separate drive-thru windows just to assemble one meal -- Wendy's (NYSE:WEN) hamburgers, McDonald's fries, and Whataburger's ketchup? Trust me, that combo is well worth the hassle. The fact is, though, fast-food fans are generally a loyal bunch, and chances are, most will count at least one of Yum! Brands' (NYSE:YUM) popular trio among their favorites.
Fourth-quarter results released after the bell yesterday reflected growth in two of the three brands. As in last quarter, Pizza Hut and Taco Bell led the domestic charge, with both reporting a 4% increase in same-store sales. KFC was again the laggard, with a 2% decline in quarterly comps. Earnings during the period climbed 10% to $0.77, from $0.70 a year ago, on revenues that rose 5% to $2.8 billion.
Much of the credit for the company's growth goes to its flourishing international operations, as domestic revenues were essentially flat at $1.7 billion. Overseas, 1,077 new restaurants went into operation last year -- about three per day. Not surprisingly, the bulk of those new outlets set up shop in China, which has been the company's most profitable and fastest-growing region. The number of restaurants operating in China jumped 28%, while system sales in that country increased by 19%. Overall, international system sales rose 8%, with double-digit growth in total revenues.
Operating profits in the international segment jumped 13% for the quarter, partially offsetting those domestically, which registered a corresponding 13% drop. Combined, operating income dipped 2% lower to $346 million, but with declining interest expenses and a lower tax rate, net income still managed to beat the company's internal forecasts, as well as analysts' expectations.
Yum! Brands was also quick to point out that cash generated by operations reached a record high of $1.1 billion. Furthermore, the company garnered an investment-grade rating from each of the major agencies, after reducing its debt load by $3 billion over the past seven years. With a stronger balance sheet, the company was able to devote $569 million to stock repurchases and also distribute its first quarterly dividend, a November payment of $0.10.
Yum!'s fourth-quarter results are respectable, but they pale next to those of fast-food king McDonald's, which recently posted a tripling of earnings, along with expanding margins, solid same-store sales gains of 5.1%, and record full-year revenues of $19 billion. While I prefer Yum!'s menu items, McDonald's stock -- which trades at a substantially lower forward multiple -- may look more tempting.
Do you cringe at the thought of ordering a boring, pre-made burger? Get some more exciting dinner ideas in the Fool's Recipes/Cooking Discussion Board.
Fool Contributor Nathan Slaughter owns none of the companies mentioned.
