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Yum Brands Inc
YUM : NYSE : Services

$70.33 -0.13 | -0.18%
Today's Range: 70.00 - 70.48
Avg. Daily Volume: 3,910,400
05/21/13 - 11:10 AM ET

Financial Analysis


YUM BRANDS INC's gross profit margin for the first quarter of its fiscal year 2013 is essentially unchanged when compared to the same period a year ago. Sales and net income have dropped, underperforming the average competitor within its industry. YUM BRANDS INC has weak liquidity. Currently, the Quick Ratio is 0.54 which shows a lack of ability to cover short-term cash needs. The liquidity decreased from the same period a year ago, despite already having weak liquidity to begin with. This would indicate deteriorating cash flow.

During the same period, stockholders' equity ("net worth") has increased by 7.04% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.



Income Statement Q1 FY13 Q1 FY12
Net Sales ($mil)2535.02743.0
EBITDA ($mil)592.0667.0
EBIT ($mil)462.0540.0
Net Income ($mil)337.0458.0


Balance Sheet Q1 FY13 Q1 FY12
Cash & Equiv. ($mil)762.01099.0
Total Assets ($mil)8945.09343.0
Total Debt ($mil)2945.03325.0
Equity ($mil)2293.02142.0


Profitability Q1 FY13 Q1 FY12
Gross Profit Margin35.4635.22
EBITDA Margin23.3524.31
Operating Margin18.2219.69
Sales Turnover1.51.39
Return on Assets16.516.19
Return on Equity64.3670.63
Debt Q1 FY13 Q1 FY12
Current Ratio0.911.01
Debt/Capital0.560.61
Interest Expense33.040.0
Interest Coverage14.013.5


Share Data Q1 FY13 Q1 FY12
Shares outstanding (mil)450.0460.0
Div / share0.340.29
EPS0.720.96
Book value / share5.14.66
Institutional Own % n/a n/a
Avg Daily Volume3932143.05488289.0

Valuation


BUY. The current P/E ratio indicates a discount compared to an average of 29.81 for the Hotels, Restaurants & Leisure industry and a premium compared to the S&P 500 average of 19.08. For additional comparison, its price-to-book ratio of 13.66 indicates a significant premium versus the S&P 500 average of 2.44 and a significant premium versus the industry average of 7.92. The current price-to-sales ratio is well above the S&P 500 average, but below the industry average. The valuation analysis reveals that, YUM BRANDS INC seems to be trading at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
YUM 22.25 Peers 29.81   YUM 14.14 Peers 13.90

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

YUM is trading at a significant discount to its peers.

 

Average. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

YUM is trading at a valuation on par to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
YUM 18.74 Peers 22.31   YUM NM Peers 1.62

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

YUM is trading at a valuation on par with its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

YUM's negative PEG ratio makes this valuation measure meaningless.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
YUM 13.66 Peers 7.92   YUM -0.95 Peers 62.38

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

YUM is trading at a significant premium to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, YUM is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
YUM 2.33 Peers 2.82   YUM 3.71 Peers 7.25

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

YUM is trading at a discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

YUM significantly trails its peers on the basis of sales growth

 

 

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