Yum! Brands (YUM): Earnings Preview - Wells Fargo

September 30, 2016 8:41 AM EDT
Get Alerts YUM Hot Sheet
Price: $63.06 +1.03%

Rating Summary:
    16 Buy, 11 Hold, 2 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 28 | Down: 20 | New: 17
Trade YUM Now!
Join SI Premium – FREE

Get access to the best calls on Wall Street with StreetInsider.com's Ratings Insider Elite. Get your Free Trial here.

Wells Fargo analyst, Jeff Farmer, reiterated his Market Perform rating on shares of Yum! Brands (NYSE: YUM) ahead of the company reporting 3Q16 earnings on 10/5 (AMC). The analyst expects investors to focus on:

1) KFC China’s ability to hold SSS momentum (3Q-to-date SSS were up low-double-digits) and color on SSS through the first few weeks of 4Q16 which began on 9/3

2) PH Casual Dining recovery in China

3) persistence of the 3Q-to-date improvement at Taco Bell (TB) despite the softening industry backdrop (in 2Q14, TB posted its first negative SSS since 1Q14)

On New Yum!, investors remain curious about G&A efficiencies, which based on the analyst's peer analysis, appears to be an area for potential improvement (YUM currently spends about $26,000 per average system store vs. $15,000-$22,000 at highly franchised peers).

The analyst cut 2016E EPS to $3.70 from $3.72 and 2017E to $4.17 from $4.20 to reflect FX pressures.

No change to the $85-$89 valuation range which equates to 12.0-12.5x 2017E EBITDA.

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 $89.81 yesterday.



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

You May Also Be Interested In






Related Categories

Analyst Comments

Related Entities

Earnings, Wells Fargo

Add Your Comment