Yum! Brands (YUM): Cutting Estimates Ahead Of The Split - RBC

October 7, 2016 7:01 AM EDT
Get Alerts YUM Hot Sheet
Price: $64.36 +0.30%

Rating Summary:
    16 Buy, 11 Hold, 2 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 13 | Down: 22 | New: 54
Trade YUM Now!
Join SI Premium – FREE

Get instant alerts when news breaks on your stocks. Claim your 2-week free trial to StreetInsider Premium here.

RBC Capital analyst, David Palmer, reiterated his Outperform rating on shares of Yum! Brands (NYSE: YUM) as he looks forward to hearing about new initiatives at the company's investor day on 10/11.

Following the slight 2Q EPS miss, he reduced 2016 and 2017 EPS estimates from $3.68 and $4.18 to $3.65 (+15% YOY) and $4.14 (+13% YOY) based on lower SSS sales in China as it recovers from the South China Sea protests (4-5pp SSS headwind) offset by accelerating margin recapture and stable to improving momentum in the Taco Bell and KFC divisions.

New SSS forecasts are for 0%, 3%, -1% and 2% in 4Q16 for China, KFC, Pizza Hut, and Taco Bell respectively vs. our prior estimate of 2% across all divisions.

Despite the changes, the $97 price target remains based on a SOTP analysis, which yields a $64 value from the New Yum and a $33 value for Yum China.

Yum China is valued at 10x 2017 EV/EBITDA translating to a 21x P/E while the New Yum is valued at 14x 2017 EV/EBITDA, translating to 23x P/E.

No change to the price target of $97.

For an analyst ratings summary and ratings history on Yum! Brands click here. For more ratings news on Yum! Brands click here.

Shares of Yum! Brands closed at $87.44 yesterday.

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In

Related Categories

Analyst Comments, Analyst EPS Change

Related Entities

RBC Capital

Add Your Comment