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Omar Venerio
Omar Venerio
Articles (1720) 

Thusday Morning Market Highlights

Markets in the green, shares of Yum! Brands fall on quarterly results

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 (NYSE:TPR) +5.6%

• Textron Inc (NYSE:TXT) +7.6%

• Ford Motor Co (NYSE:F) +5.7%

• Martin Marietta Materials Inc (NYSE:MLM) +5.3%

Losers

• Ralph Lauren Corp (NYSE:RL) -7%

• Cigna Corp (NYSE:CI) -2.6%

• Omnicom Group Inc (NYSE:OMC) -1.7%

• Borgwarner Inc (NYSE:BWA) -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. (NYSE:YUM) 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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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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