This Day On The Street
Continue to site
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! Brands Is Cheap and Delicious

Moreover, the double-digit year-over-year growth is also partly due to Yum!'s poor performance in the first quarter of 2013, when the company's same-store sales plummeted by 20%. This drop was attributed to the bird flu outbreak and a food-safety scandal in China that severely hurt the demand for chicken.

The strong year-over-year growth suggests that Yum! is on track for a full recovery. The company still has a ways to go. Prior to the avian flu and poultry supply issues, in the third quarter of 2012, Yum! Brands reported revenues of $1.98 billion, 43% higher than the most recent results.

The increase in sales was partly due to the new ad campaign for KFC's crispy chicken and a new menu which includes 15 additional items. Plus, the company is planning to open 700 new outlets in China in the current year, which will drive its future growth.

In India, Yum! reported a 15% year-over-year increase in sales in the first quarter. As in China, Yum! is eyeing future growth in India through new store openings, better advertising and new product launches. The company, however, still has to work on improving its same-store sales, which fell 1% in the first quarter of 2014, following a 1% drop in FY 2013.

Unlike with its China and India divisions, there is no U.S. division. That is because Yum! has changed its reporting style by combining Yum! Restaurants International, which included 14 different developed and emerging markets, and the U.S. divisions into three brands: KFC, Pizza Hut and Taco Bell. Consequently, this time Yum! has not reported the specific revenue and profit numbers for its U.S. operations.

However, in the first quarter of 2014, the company said that it struggled at home due to the severe weather conditions.

A key difference between the U.S. and other markets is that the U.S. is heavily weighted toward Taco Bell, which represents two-thirds of the country's operating profits. Currently, Taco Bell is responsible for a fifth of Yum!'s operating profits, 97% of which come from the U.S.

In the U.S., Yum! has launched the third round of its breakfast advertising campaign, mainly aimed at younger customers. The company is a new player in this industry, which is dominated by its rivals McDonald's and Starbucks (SBUX).

Yum! is focusing on expanding its breakfast menu in new cities, which could drive Taco Bell's revenue growth in the coming quarters. McDonald's, on the other hand, has downplayed any threat to its position in the breakfast industry from Taco Bell's entry in the market.

>>Read More: Biotech Stock Mailbag: Previewing InterMune's Big Week Ahead

>>Read More: 4 Reasons Why Natural Gas Prices Will Tumble

>>Read More: Here's Why Apple Can't Dawdle in Replacing Leadership

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

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
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
YUM $80.65 1.17%
AAPL $94.01 -1.20%
FB $118.06 0.54%
GOOG $695.70 0.48%
TSLA $227.00 -2.30%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs