Market Blog Research

Is YUM oversold?

While looking for fundamentally strong stock in the Consumer Services space, with positive Profit margin, Dividend Yield and dividend payout and a PE lesser than that of the S&P 500, we came across a well known name – YUM brands, Inc.

Expert Opinion –YUM has a Confidence Meter of 59%. Recently, Evercore ISI upgraded the stock to “Outperform”, with a view that it’ll gradually grow bullish in long term. It also recently hit its 52-week low, and analysts are bullish. YUMC – Yum China Holdings recently opened Taco Bell in China, in the hopes of growing its international presence.  Analysts are sceptical about this since Mexican cuisine is largely unknown in China, and Taco Bell’s previous operations didn’t work out. However, the company is optimistic about its China operations – with new found learning from KFC and Pizza Hut. YUMC, being an independent entity, is trying to win over Chinese diners by adapting local trends and tastes, and advertising via social media about Mexican cuisine.

Fundamentals – YUM has a PE of 15.4, P/S of 3.65, Current Ratio of 1.08, and a Dividend Payout ratio as high as 6.35.

Forecast – The Earnings forecast is Positive. YUM announced adjusted earnings of $0.79 per share for Q4 2016. The revenue estimates for the next quarter is $1,695M.

Sentiment – YUM currently has negative sentiment, and the Social media buzz is higher than usual.  Several Large investors like Hudock Capital Group, BKS Advisors, TLP Group, Assetmark, Inc, Vigilent Capital have boosted or purchased new stakes in YUM; however, Dimensional Fund Advisors LP reduced its stake in YUM according to its latest 13F filing.

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