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Yum Brands Not a Main Course Yet

Stocks in this article: YUM CMG MCD

When it comes to sales growth and quarterly revenue growth, the analysts expect a 4.5% decline to around $3.03 billion for the first quarter of 2013. Remember, YUM has a market cap of more than $29 billion and runs an enormous system of restaurants, which prepare, package and sell various food items, as well as operates Chinese casual dining concept restaurants.

YUM operates approximately 39,000 restaurants in 125 countries and territories under the KFC, Pizza Hut and Taco Bell brands. They can't seem to grow fast enough, even in places such as Russia and Iran.

Keep in mind that YUM was fried after a TV report late last year claiming that some of its suppliers were giving chickens unapproved levels of antibiotics (although it didn't say whether the chickens had consented to receiving the antibiotics).

Ever since, YUM has been striving valiantly to regain the confidence of its customers. It's gone so far as to promise investors that they'll be updated with monthly sales figures for the affected regions. In the meantime, there are almost as many nervous investors as there are nervous chickens.

Complicating matters in the current quarter, the company noted earlier this month that publicity surrounding a new strain of bird flu in China is also having a "significant, negative impact" on KFC sales for April. This won't be reflected in Tuesday's earnings report.

YUM executives say they plan to move forward with plans to expand in China. CEO David Novak has said the focus of the plan is to establish restaurants in key locations, much like McDonald's (MCD) has done in the U.S.

As of Dec. 9, Novak owns more than 282,000 shares of YUM, but as recently as March, a number of insiders were exercising their stock options and selling shares while the stock was above $70. There's been no significant buying reported by insiders since.

The five-year chart below compares YUM and CMG shares. YUM Chart YUM data by YCharts

The market is like a voting machine, and the "voters" vote with their wallets. Even though CMG trades at a rich multiple to earnings and pays no dividend (YUM currently offers a 2.06% dividend yield), CMG has performed spectacularly over the past five years. Looking at YUM's five-year chart alone gives another view. YUM Chart YUM data by YCharts

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