As third-quarter earnings season kicks off, the fast food industry and its exchange traded funds (ETFs) got a boost, thanks to better than expected reports.
Yum Brands (NYSE: YUM), reported earnings of $0.70 per share, beating analysts’ expectations of $.58 per share. The outperformance was primarily driven by strong operating earnings growth from China and the United States. Domestically, consumers are seeking out cheaper dining options when they’re not eating at home. Overseas, Yum and other companies have ramped up their expansion.
Lower food costs and cost-cutting measures in the company also contributed to positive earnings results, states Ockham Research.
The parent company of Pizza Hut announced that it will increase its quarterly dividend by 11%, marking the fifth annual increase for the company. Yum is expecting to continue to grow operation by opening 1,400 new restaurants overseas and should be beneficial as the dollar continues to remain weak.
Yum has a lead in China on its U.S. competition . Burger King (NYSE: BKC) opened its first store a few years ago, while others such as Wendy’s (NYSE: WEN) and Chipotle (NYSE: CMG) only do business in North America, reports Ryan C. Fuhrmann for Investopedia.
A diversified way to gain exposure to fast food is through the PowerShares Dynamic Food & Beverage (NYSEArca: PBJ), which is up 7.3% year-to-date; YUM is 4.7%.
For more stories on fast food, visit our food and beverage category.
Kevin Grewal 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.