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Yum! Brands Inc. (NYSE:YUM) is set to report earnings after the close, and this will be the start of a slow dribble of Q3 2007 earnings season before the onslaught of earnings next week.

First Call has estimates at $0.45 EPS and $2.44 Billion in revenues.  For Q4 2007 estimates are $0.45 EPS and $3.1 Billion in revenues.  It’s probably too hard to get a solid estimate for 2008 out of the company, but if it does give estimates for 2008 they are $1.83 EPS (about 11.5% EPS growth).  Of course the wild card here could come from the falling dollar as it is becoming a larger and larger international food growth story, which would likely work further in in its favor. 

Very recently, Jim Cramer interviewed the CEO and said this was a buy on any pullback.  We also noted YUM! earlier in the year as a ‘second line defensive stock’ for a crummy market, but it didn’t make the most recent list of defensive stocks over relative valuation and excessive stock performance.

The street probably has high quite expectations on the company as it has easily exceeded earnings estimates in each of the last four quarters.  The chart here has been stellar as shares are hitting new highs immediately ahead of earnings.  Unfortunately, the average analyst target is just over $36.00, so analysts are going to have to raise targets or make the "downgrade on valuations" call.  Based upon the last look, it appears that options traders are braced for this to move up to $1.10 to $1.20 in either direction based upon today’s earnings reaction.

Unfortunately, it appears the earnings conference call is not until tomorrow morning.  Its 2007 conference for analysts and investors is not scheduled until December 12, 2007.

Jon C. Ogg
October 8, 2007