This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

YUM! Is Far From Appetizing

Over the last five years YUM has delivered 22% per year. This has handily beat the returns of the S&P 500 during that same period of time.

Over the past three years it has delivered an average of 14.5% per year. This barely beats the average market return of 13.5% per year. This stock has become more and more of an average stock recently as it gets bigger in size.

When I compare the long-term and intermediate-term returns of YUM and compare it against the other 3,569 stocks that I track, it gets a performance grade of B+.

Here's my biggest problem with the stock lately, however. YUM has severely underperformed the market over the last 12 months. Look at the numbers for yourself.

YUM's momentum has been terrible. It has badly unperformed the market over the last year. In fact, the stock is down 2.3% over the last 12 months while the market is up 18.9%. So it gets a momentum grade of D-.

Valuation: Maybe a very attractive valuation on the shares can save the day?

Data from Best Stocks Now App

The shares are currently trading at 18.5 times forward earnings with an expected five-year annual growth rate of 11%. The shares are trading at a fairly large premium to its growth rate. This shows up in the PEG ratio of 1.66.

When I extrapolate out the current earnings estimates over the next five years and apply a reasonable multiple, I do come up with a fairly attractive five-year target price -- but I require performance and value. YUM falls flat on its performance.

Stock Chart: Lastly, as a professional money manager, I require a vibrant and healthy stock chart.

Courtesy of StockCharts.com

This is about as dull of a technical pattern as you can find in this current BULL MARKET. Why would I want to have my money tied up in this dud when large-cap stock like EOG Resources (EOG), Netflix (NFLX), Priceline.com (PCLN), etc. are breaking out all over the place?

The bottom line is this: YUM! Brands was dead money before it reported earnings. Now it is really dead money.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
YUM $87.10 0.00%
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%
TSLA $218.42 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs