Management also noted that inflationary pressures, staffing challenges and supply chain disruptions have begun to abate, with further improvement expected in the upcoming quarters. Thanks to its solid business performance, Yum Brands grew its core operating profit 11%.

Digital sales reached an all-time high of $7 billion in the first quarter and thus they exceeded 45% of total sales. The focus of the company on its digital strategy has been a significant growth driver for several quarters in a row. In the first quarter, it grew its revenue 13% over the prior year’s quarter, thanks to 8% same-store sales growth and 5% growth of store count. Yum Brands has had a strong start to the year.

Even better, the company has ample room for future growth. The company has grown its earnings per share in 8 of the last 9 years, at a 7.6% average annual rate. Thanks to its exceptionally popular brands and its solid business execution, Yum Brands has exhibited a consistent growth record. However, Yum Brands remains attractive from a long-term perspective. The rally of the stock may entice some investors to take their profits. Since then, the stock has rallied 13% and thus it has outperformed the S&P 500 (+5%) by a wide margin. The restaurant chain was temporarily affected by inflation, staffing shortages and supply chain disruptions. About nine months ago, I recommended purchasing Yum Brands ( NYSE: YUM), which was highly attractive near its 52-week lows back then thanks to its nearly 8-year low valuation level and my expectations for a recovery of its business.

Yum update