Yum! reports an earnings per share growth forecast of at least 13 percent for the full year of 2012, or at least $3.24. The reported earnings per share for the third quarter alone was $1.00. This figure represents a 25-percent increase in total earnings per share compared to last year’s third quarter.
Yum!’s appealing growth trend was also apparent in its numbers announced in the second quarter. Tim Jerzyk, Senior Vice President of Yum!’s Investor Relations reported that there was a 38 percent increase in Yum!’s earnings per share year-to-date data, compared to the second quarter of 2011.
The company broke several of its records including 2012 emerging as Yum!’s eleventh consecutive year for delivering at least 13 percent of earnings per share growth, as well as it being its eighth consecutive year of its dividend yield reaching a double-digit percentage rate (Yum! reported an 18 percent increase in its quarterly dividend).
The company’s strong international development shows that it opened 394 new restaurants, 192 in China and 181 in YRI.
In total, Yum! experienced more than $3.6 billion in revenue for the third quarter, and more than $9.4 billion year-to-date.
Gurus with an Appetite for Yum!
Joho Capital’s Robert Karr, Caxton Associates’ Bruce Kovner and Fisher Asset Management LLC’s Ken Fisher all introduced Yum! to their portfolios in the second quarter.
Karr ended with 276,000 shares which accounted for 3.5 percent of his portfolio, Kovner at 130,000 shares which made up .47 percent of his portfolio and Fisher at 395,182 shares which made up .08 percent of his portfolio. The transactions for all three almost equaled or actually exceeded at least $10 million, traded with an average price of $69 per share.
Rennaissance Technologies LLC’s Jim Simons added 133,300 to his holding, almost doubling his previous holding and ending with 295,900 shares in the second quarter.
On the other hand, Baron Funds’ Ron Baron reduced his shares of Yum! by 2.9 percent, along with Jeff Auxier’s 1.2 percent reduction (of Auxier Focus Fund), Paul Tudor Jones’ 3.98 percent reduction (of the Tudor Group), Jeremy Grantham’s 35.14 percent reduction (of GMO LLC) and Pioneer Investment’s 86 percent reduction.
The following Gurus sold out of Yum! stocks in the second quarter: Capital Growth Management LP’s Ken Heebner, SAC Capital Advisors’ Steven Cohen, Moore Capital Management LP’s Louis Moore Bacon and Manning & Napier Advisors Inc.
Kentucky-based Yum! is currently trading close to its 10-year high, at a market price of $70.71. It operates about 38,000 restaurants in more than 120 countries and territories – its international division alone (YRI) has more than 14,000 restaurants outside of the U.S and China.
This year, Yum! restaurants have taken leaps to increase their competitive edge against rival brands.
Taco Bell, KFC and Pizza Hut not only released new menu items, but also revamped promotional initiatives with big-name endorsements earlier this year.
NFL quarterbacks such as Tim Tebow and Aaron Rodgers have both partnered with Pizza Hut – Tebow in Pizza Hut’s BOOK IT! National Reading Incentive Program, and Rodgers for promoting Pizza Hut’s new Big Dinner Box. Multi-Grammy Award winner and pop superstar, Christina Aguilera has also appeared in a public service announcement for Pizza Hut’s World Hunger Relief effort announced in September.
KFC introduced to the market Original Recipe Chicken Bites in July, Chicken Littles slider sandwiches in September and Dip Ems chicken tenders with dipping sauces just yesterday.
Lastly, Taco Bell, in addition to adding Doritos Locos Tacos to its menu in March and A.M. Crunchwraps in August, has also made headlines for introducing gourmet bowls and burritos in its Cantina Bell menu, speculated to have been a move to compete against Chipotle Mexican Grill Inc. (CMG).
With a market cap of $31.66 billion, Yum! Brands maintains a P/E (ttm) ratio of 21.5, a P/S ratio of 2.5 and a P/B ratio of 14.4. The dividend yield of total stocks is 73 percent
GuruFocus ranks the company 7 out of 10 in Financial Strength, 8 out of 10 in Profitability and Growth and 5 stars for Business Predictability.
Yum! is categorized under one Severe Warning sign, indicating an active asset growth of 10.8 percent a year, which exceeds its revenue growth rate of 6 percent in the last three years – this may mean that the company is losing efficiency.
Yum! also upholds four Good Signs, showing a strong Altman Z-score, a consistent growth in revenue, an expanding operating margin and a dividend yield close to a two-year high.