Here is a long-term analysis of Yum! Brands (YUM, Financial). The article gives investors an overview of the company’s financial history, business diversification as well as the valuation level and dividend policy.
Company Profile:
Yum! Brands (YUM) is a quick service restaurant (QSR) company that develops, operates, franchises and licenses a worldwide system of both traditional and non-traditional QSR restaurants. The company has five restaurant concepts (Kentucky Fried Chicken, Pizza Hut, Taco Bell, Long John Silver’s and A&W All-American Food Restaurants). Yum! Brands has nearly 38.000 restaurants in more than 110 countries. 19 percent of the restaurants are operated by the company, 75 percent are operated by franchisees and 6 percent by licensees.
Business Diversification:
The company operates in three segments: China Division (37 percent of sales and 43 percent of profits), YRI - YUM Rest International - (28 percent of sales and 32 percent of profits) and U.S. (35 percent of sales and 25 percent of profits). Roughly 65 percent of sales came from abroad.
Valuation of the Company:
Dividend Yield: 1.63 Percent / 1.85 Percent expected
Payout Ratio: 36.97 Percent
5-Year Dividend Growth: 35.68 Percent
Market Capitalization: 25.13 billion
Cash and Short Term Investments: 1.53 billion
Long-Term Debt: 2.92 billion
Cash flow from Operations: 1.97 billion
CAPEX: 0.80 billion
All pricing measures increased over the past ten years. Price to earnings ratio increased in total by 45 percent, price to book ratio by 20 percent, price to cash flow by 39 percent. The price to sales doubled over the past decade.
Long-Term Fundamentals and Dividends:
The company had a strong track record. Sales of YUM increased with 63 percent over the past decade. Earnings before taxes and interest (EBIT) increased by 117 percent and net income finally grew in total 135 percent.
YUM paid dividends since 2004. The company had 6 years of consecutive dividend increases. The next ex-div. Date was April 13, 2011. Payments will be received on May 06, 2011. The latest dividend is the third quarter dividend at the same rate.
Competitors:
Yum! Brands is a cyclical consumer goods and services company. It has several competitors. Biggest rival is McDonalds (MCD, Financial). Other billion players are Darden Restaurants (DRI, Financial), Chipotle Mexican Grill (CMG, Financial), Wendy’s Arby’s Group (WEN, Financial), Domino’ Pizza (DPZ, Financial) as well as Jack in the Box (JACK, Financial).
Consensus Developments:
In accordance to Reuters, 20 analysts covered Yum! Brands and submitted an outperform rating with a mean target price of USD $57.27 as of May 03, 2011. This value represents an upside of 6.11 percent compared to the close end price of May 03, 2011. The mean target price estimate decreased over the past 18 months by 19.29 percent.
Related Stock Ticker Symbols:
YUM, MCD, DRI, CMG, WEN, DPZ, JACK
Full Disclosure: No positions, not intended to buy any stocks or obligations of the company within the next 72 hours. I don’t receive any compensation by the company.
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Disclaimer:
The presented data and material is for informational purposes only. Despite careful researches, we cannot guarantee for the truth of the figures. The past operational performance as well as the stock performance and dividend developments does not guarantee a positive future performance. Please, before you buy or sell any stocks, you should do your own research and reach your own conclusion.
