Zacks Investment Research Lowers Yum! Brands (YUM) to Hold

Zacks Investment Research lowered shares of Yum! Brands (NYSE:YUM) from a buy rating to a hold rating in a research report sent to investors on Thursday morning.

According to Zacks, “Yum Brands’ efforts to drive growth in its three iconic global brands and creating more efficient cost structure have reflected in its share price movement so far this year, in which, the company outperformed the industry. We expect the growth trajectory to continue after the restaurant posted better-than-expected earnings in third-quarter 2018. The company’s refranchising activities led to year-over-year growth in the bottom line while revenues suffered due to a decrease in its sales. Although comps in the reported quarter underperformed estimates, Yum! Brands’ initiatives to drive sales are likely to pay off in the future. Further, an efficient cost structure by refranchising is expected to continue boosting earnings. Earnings estimates for 2018 have also gone up over the past 30 days. However, high costs of restaurant operations and dented sales due to refranchising are near-term concerns for the company.”

A number of other equities research analysts have also weighed in on YUM. BMO Capital Markets reissued a hold rating and set a $88.00 target price on shares of Yum! Brands in a report on Friday, August 3rd. ValuEngine raised shares of Yum! Brands from a hold rating to a buy rating in a report on Friday, September 7th. UBS Group set a $99.00 target price on shares of Yum! Brands and gave the stock a buy rating in a report on Monday, September 10th. KeyCorp started coverage on shares of Yum! Brands in a report on Wednesday, October 3rd. They set a sector weight rating on the stock. Finally, BTIG Research boosted their target price on shares of Yum! Brands from $92.00 to $102.00 and gave the stock a buy rating in a report on Wednesday, October 10th. Thirteen equities research analysts have rated the stock with a hold rating and eight have issued a buy rating to the company. The company has a consensus rating of Hold and an average target price of $90.75.

YUM opened at $87.19 on Thursday. Yum! Brands has a fifty-two week low of $75.88 and a fifty-two week high of $92.21. The company has a market cap of $27.18 billion, a price-to-earnings ratio of 29.46, a price-to-earnings-growth ratio of 1.85 and a beta of 0.85.

Yum! Brands (NYSE:YUM) last posted its earnings results on Wednesday, October 31st. The restaurant operator reported $1.04 earnings per share for the quarter, topping the Zacks’ consensus estimate of $0.83 by $0.21. Yum! Brands had a net margin of 28.81% and a negative return on equity of 17.89%. The firm had revenue of $1.39 billion for the quarter, compared to analyst estimates of $1.37 billion. During the same period in the previous year, the firm posted $0.68 EPS. The company’s revenue for the quarter was down 3.1% compared to the same quarter last year. On average, equities analysts predict that Yum! Brands will post 3.7 earnings per share for the current fiscal year.

The company also recently declared a quarterly dividend, which will be paid on Friday, December 7th. Stockholders of record on Monday, November 26th will be given a $0.36 dividend. The ex-dividend date of this dividend is Friday, November 23rd. This represents a $1.44 dividend on an annualized basis and a dividend yield of 1.65%. Yum! Brands’s dividend payout ratio (DPR) is currently 48.65%.

Yum! Brands declared that its Board of Directors has initiated a share buyback program on Friday, August 10th that permits the company to repurchase $2.00 billion in outstanding shares. This repurchase authorization permits the restaurant operator to reacquire up to 7.6% of its stock through open market purchases. Stock repurchase programs are often a sign that the company’s board believes its shares are undervalued.

In other news, CEO Roger G. Eaton sold 44,823 shares of the business’s stock in a transaction that occurred on Thursday, November 8th. The shares were sold at an average price of $90.54, for a total value of $4,058,274.42. Following the transaction, the chief executive officer now owns 160,726 shares in the company, valued at approximately $14,552,132.04. The sale was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through the SEC website. Also, CFO David W. Gibbs sold 6,369 shares of the business’s stock in a transaction that occurred on Monday, September 17th. The stock was sold at an average price of $87.83, for a total transaction of $559,389.27. Following the completion of the transaction, the chief financial officer now owns 47,701 shares in the company, valued at approximately $4,189,578.83. The disclosure for this sale can be found here. Insiders sold a total of 71,289 shares of company stock worth $6,401,458 in the last 90 days. Corporate insiders own 0.63% of the company’s stock.

Several institutional investors have recently added to or reduced their stakes in the stock. Morgan Stanley lifted its position in shares of Yum! Brands by 8.7% during the 3rd quarter. Morgan Stanley now owns 1,449,142 shares of the restaurant operator’s stock valued at $131,742,000 after acquiring an additional 116,110 shares during the period. Legal & General Group Plc lifted its position in shares of Yum! Brands by 4.8% during the 3rd quarter. Legal & General Group Plc now owns 1,756,233 shares of the restaurant operator’s stock valued at $159,642,000 after acquiring an additional 80,542 shares during the period. NorthCoast Asset Management LLC lifted its position in shares of Yum! Brands by 229.9% during the 3rd quarter. NorthCoast Asset Management LLC now owns 75,457 shares of the restaurant operator’s stock valued at $6,860,000 after acquiring an additional 52,584 shares during the period. Beaton Management Co. Inc. acquired a new position in shares of Yum! Brands during the 3rd quarter valued at $210,000. Finally, TIAA CREF Investment Management LLC lifted its position in shares of Yum! Brands by 37.4% during the 3rd quarter. TIAA CREF Investment Management LLC now owns 1,424,785 shares of the restaurant operator’s stock valued at $129,527,000 after acquiring an additional 388,027 shares during the period. Institutional investors own 73.08% of the company’s stock.

Yum! Brands Company Profile

YUM! Brands, Inc, together with its subsidiaries, develops, operates, and franchises quick service restaurants worldwide. It operates in three segments: the KFC Division, the Pizza Hut Division, and the Taco Bell Division. The company operates restaurants under the KFC, Pizza Hut, and Taco Bell brands, which specialize in chicken, pizza, and Mexican-style food categories.

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