RBC Capital Reiterates Top Pick on Yum! Brands (YUM) Following 2Q Earnings
RBC Capital reiterates a Top Pick rating and $103.00 price target on Yum! Brands (NYSE: YUM) following 2Q15 earnings results. Reported adjusted EPS was $0.69 (compared to $0.62 consensus). Analyst David Palmer believes significant stock appreciation beyond base case is possible over the next year.
Palmer commented, "2Q15 adjusted EPS was $0.69 (-6% YOY; vs. RBCe $0.64 and cons. $0.62), as EPS upside was largely driven by below the profit line items. While the China division's 10% SSS decline was worse than expected (RBCe -6%, cons. -8%), labor productivity efforts limited sales deleverage (China restaurant margins were 14.6% vs. RBC/cons. 13.3%). This resulted in profit dollars being in line with our expectations. We look forward to hearing about China sales trends during the first half of 3Q as well as the trajectory of brand perception scores in China and what they could imply for the second half of the year. We also wonder if the recent volatility in the Chinese stock market has had any impact on the company's sales recovery."
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Shares of Yum! Brands closed at $91.99 yesterday.