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Yum China reports earnings beat, shares soar on improved KFC, Pizza Hut sales

Chinese customers have dinner in a KFC restaurant in Beijing West railway station.
Zhang Peng | LightRocket | Getty Images
Chinese customers have dinner in a KFC restaurant in Beijing West railway station.

Investors ate up shares of Yum China.

Share prices spiked 9.16 percent higher on Thursday, a day after the Chinese spinoff from U.S.-based Yum Brands reported quarterly earnings that beat Street estimates.

Yum China said it had first-quarter adjusted earnings of 44 cents per share, topping a Thomson Reuters consensus estimate of 38 cents.

The operator of fried chicken outlet KFC, Pizza Hut and Taco Bell in China saw same-store sales — a metric closely watched by Wall Street for restaurant stocks — rise 1 percent in the first quarter, compared with flat same-store sales the period one year ago. This number was boosted by growth of 1 percent at KFC-branded stores, and by 2 percent growth at Pizza Hut locations, the company said.

"We are especially gratified with the progress made on two key drivers of growth – Digital and Delivery," Chief Executive Micky Pant said in a statement. "We believe we have unprecedented insights into consumer behavior and have been engaging with them across the digital eco-system: from pre-order to payment."

The Chinese restaurant chain, which has more than 7,600 properties in the country, said it remains on track to open 550 to 600 restaurants in 2017.

Yum China said its total revenue for the quarter fell 1.5 percent to $1.28 billion, but this beat the average analyst estimate of $1.27 billion, according to Reuters.

Yum China Holdings closed Wednesday at $28.18. The stock is up nearly 8 percent for the year.

YUMC year-to-date performance

Source: FactSet