Food, Consumer ETFs Snack on Yum Outlook

July 13th at 4:38pm by Tom Lydon

Yum Brands (NYSE: YUM) may provide a boost to food and consumer sector exchange traded funds after the fast food giant reported quarterly results after Wednesday’s closing bell and raised its 2011 profit outlook.

The company, which brands include KFC and Taco Bell, has been able to offset slower U.S. sales by expanding in China. Yum shares rose in after hours trading Wednesday.

“I’m pleased to report we are raising our full year earnings-per-share growth forecast to at least 12% based on the continued strength of our international businesses,” Chief Executive David C. Novak said in the earnings release. “We delivered EPS growth of 13% in the second quarter as strong performance in China and other emerging markets, combined with the benefit of a lower tax rate, offset a very disappointing quarter in the U.S.”

Yum shares have risen nearly 40% over the past year, expanding faster than the S&P 500 or broad market. [Consumer ETFs Search Overseas for Profit.]

Yum is taking the global market by storm, with brands such as Pizza Hut, Taco Bell and KFC gaining international appeal. For this reason, Yum has expanded into emerging markets such as China and India, which has helped to offset slower sales in developed markets such as the U.S.

PowerShares Dynamic Food & Beverage (NYSEArca: PBJ), up 5.7% for the second quarter, gives 5% of assets to Yum shares, while the PowerShares Dynamic Leisure and Entertainment (NYSEArca: PEJ) gives 4.9% to the fast food company. [Food ETFs Benefit as Industry Cuts Dead Weight.]

PowerShares Dynamic Food & Beverage

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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