The company's first-quarter net income actually dropped 14% to $218 million, or $0.46 per share, even though the company's headlines touted 14% profit growth "excluding special items." The special items included a $100 million pre-tax gain in 2008 from the sale of its interest in KFC Japan as well as U.S. "business transformation" gains/losses from refranchising and restructuring in 2009.
Global sales growth increased 4% before currency translation, with China jumping 12% -- quite a difference from the 2% decline that Yum! Brands experienced in U.S. sales; however, including the currency effects, net sales actually fell 8% to $2.2 billion. Worldwide same-store sales increased just 1%.
I'm not quite sure why investors responded so enthusiastically to the quarter. As far as I can tell, rival McDonald's
Yum! Brands has an array of popular and well-known fast-food brands, including Taco Bell, KFC, and Pizza Hut, and a lot of investors also like the stock because of its continued expansion into the Chinese market. Meanwhile, I'm sure it was heartening that Yum! Brands stuck to its guidance for 10% earnings growth in 2009.
I thought Chipotle
Maybe I'm underestimating the future growth of Yum! Brands' international expansion, but Yum! Brands isn't a stock I find too tempting right at this moment. Waiting for a little less euphoria surrounding the stock might make for a better buying opportunity.
Chow down on some related Foolishness:
Chipotle Mexican Grill is a Motley Fool Rule Breakers recommendation and a Motley Fool Hidden Gems pick. The Fool owns shares of Chipotle Mexican Grill class B shares. Try any of our Foolish newsletters today, free for 30 days.