US Markets
U.S. stocks opened higher on Thursday morning on the back of positive economic data. The U.S. economic activity rose in the third quarter at a record 33.1% annualized pace. The Dow gained 0.50% to 26,651, the S&P 500 index rose 0.94% to 3,301 and the Nasdaq Composite Indexwas up 1.20% to 11,136.
Gainers
• Tapestry Inc (TPR, Financial) +5.6%
• Textron Inc (TXT, Financial) +7.6%
• Ford Motor Co (F, Financial) +5.7%
• Martin Marietta Materials Inc (MLM, Financial) +5.3%
Losers
• Ralph Lauren Corp (RL, Financial) -7%
• Cigna Corp (CI, Financial) -2.6%
• Omnicom Group Inc (OMC, Financial) -1.7%
• Borgwarner Inc (BWA, Financial) -3.3%
Global Markets
The main European stock markets wer midex. The U.K.'s FTSE 100 fell 0.06%, France's CAC 40 lost 0.04%, Germany's Dax was up 0.18% and Spain's Ibex 35 slid 1.22%.
In Asia, Japan's Nikkei 225 fell 0.37%, India's BSE Sensex retreated 0.43%, Hong Kong's Hang Seng lost 0.49% and China's Shanghai Composite was up 0.11%.
Yum! Brands releases earnings report
Shares of Yum! Brands, Inc. (YUM, Financial) fell almost 2% on Thursday morning after the company announced financial results for its third quarter of fiscal 2020. It posted earnings per share of $1.01, beating analysts' estimates by 22 cents, on revenue of $1.45 billion, which grew 8.2% year-over-year and also beat expectations by $40 million.
CEO David Gibbs had the following to say:
"Third-quarter results were encouraging, demonstrating the resilience of the Yum! portfolio as Yum! generatedyear-over-year core operating profit growth, continued to reopen temporarily closed restaurants and achieved global same-store sales growth of approximately flat, in aggregate, for our open store base. For the second consecutive quarter, digital sales increased by more than $1 billion over the prior year and set a single quarter record of $4 billion… Importantly, our balance sheet and liquidity position are strong and franchisee health improved"
In the quarter, Worldwide system sales rose 1% overall, with Taco Bell at 5%, KFC at -1% and Pizza Hut at -4%.
In the KFC division, the operating margin increased 290 basis points to 47.2% due to International franchise bad debt recoveries. In Pizza Hut, the operating margin rose 70 basis points to 36.7%, driven by U.S. franchise bad debt recoveries, offset by International same-store sales declines. In the Taco Bell division, the operating margin inched up 430 basis points due to lower general and administrative expenses, same-store sales growth and higher company restaurant margins.
At the end of June, Joel Greenblatt (Trades, Portfolio) reduced his holding in the stock by 27% to 151,195 shares.
Disclosure: The author holds no positions in any stocks mentioned.
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