Morgan Stanley Comments On "As Expected" 2Q Results For Yum!

According to Morgan Stanley, Yum! Brands YUM 2Q results played out as expected, but in extremes — China's comps — +18% — were far better than even bullish prognostications, while the US was worse as profits declined 28% on a 4% SSS decline. Morgan Stanley said that on balance, this quarter will test—and likely prove—that the fading US business is no longer materially an investor concern, especially in light of superlative China results, which represent the company's future, whereas the US represents the company's past. “2Q EPS of $0.66 beat our $0.62, but lower taxes alone provide ~$0.07 of the outperformance. The underlying business — as measured by operating profit — missed by $15mm (5%) on lower US but did manage to grow slightly (+2.5%) thanks to better than expected China & YRI.” Yum! Brands closed yesterday at $55.58.